Sunny works as an assistant to a real estate agent. she prepares a price comparison for a client thinking of selling a house. sunny investigates the list prices and sale prices of comparable houses that have recently sold in nearby neighbourhoods.
house 1:
list price: $324 500
sale price: $315 000
house 2:
list price: $379 000
sale price: $370 000
house 3:
list price: $299 900
sale price: $295 000
a) determine the mean and median list and sale prices and the price ranges.
b) which measure would you use for estimating what the client's house might sell for? explain you choice.
To determine the mean and median list and sale prices, as well as the price ranges, we will follow the following steps:
a) Mean Calculation:
To calculate the mean, we need to sum up all the values and divide by the total number of values.
List Price Mean:
(324500 + 379000 + 299900) / 3 = 334800
Sale Price Mean:
(315000 + 370000 + 295000) / 3 = 326666.67
Median Calculation:
To calculate the median, we need to arrange the values in ascending order and find the middle value. If there is an even number of values, we take the average of the two middle values.
List Prices in Ascending Order: 299900, 324500, 379000
Median List Price: 324500
Sale Prices in Ascending Order: 295000, 315000, 370000
Median Sale Price: 315000
Price Range Calculation:
To find the price range, we subtract the minimum value from the maximum value.
List Price Range:
379000 - 299900 = 79000
Sale Price Range:
370000 - 295000 = 75000
b) To estimate what the client's house might sell for, the median sale price would be a more suitable measure. The median is less affected by extremely high or low values compared to the mean. In this case, the median sale price is $315,000, which represents the middle value and is a better indicator of the typical sale price. Using the median avoids potential outliers that can distort the mean, making it a more reliable estimate for the client's house.