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: $299 000
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.
First, I'll tell you what mean is. It is when you take the sum of your numbers and divide it by the quantity of numbers. So, a+b+c=d. d/3= the mean. Try it out and post what you got. I'm sure you can figure this out on your own.
I made a mistake for house 3, I put $299000 in the post above, it is not $299000, it is actually $299900
To determine the mean and median list and sale prices, as well as the price ranges, we need to calculate some basic statistics.
a)
Mean: The mean is calculated by adding up all the prices and dividing by the number of prices.
To calculate the mean list price:
(list price of house 1 + list price of house 2 + list price of house 3) / 3
= ($324,500 + $379,000 + $299,000) / 3
= $1,002,500 / 3
= $334,166.67
To calculate the mean sale price:
(sale price of house 1 + sale price of house 2 + sale price of house 3) / 3
= ($315,000 + $370,000 + $295,000) / 3
= $980,000 / 3
= $326,666.67
Median: The median represents the middle value when the prices are arranged in ascending order. If there is an even number of values, the median is the average of the two middle values.
To calculate the median list price, we arrange the prices in ascending order:
$299,000, $324,500, $379,000
Since we have an odd number of values, the median is the middle value, which is $324,500.
To calculate the median sale price, we arrange the prices in ascending order:
$295,000, $315,000, $370,000
Since we have an odd number of values, the median is the middle value, which is $315,000.
Price Range: The price range is the difference between the highest and lowest prices.
For list prices:
Highest list price - Lowest list price
= $379,000 - $299,000
= $80,000
For sale prices:
Highest sale price - Lowest sale price
= $370,000 - $295,000
= $75,000
b) To estimate what the client's house might sell for, it would be recommended to use the median sale price. The median is a better measure of central tendency in this case because it is not as affected by outliers or extreme values. The median sale price represents the middle value of the sold houses, which is a good indicator of what the client's house might sell for in a similar market.