Sam pays $740 for his house, and he wants to see if he pays too much. He asks people who live on the neighborhood with the similar house sizes, and 10 of the people give him their prices. It is found out that the mean and standard deviation of the 10 houses on the neighborhood is $650 and $90 respectively. Can we conclude that Sam is overpaying?
I suppose it would depend on how you're defining "overpaying."
Certainly, we can assume that the distribution of houses is N(650, 90), and from that, we can conclude that Sam paid an amount one standard deviation above the mean. Whether that is overpaying or not depends on the definition of overpaying.