Concepts Explained with Real Estate Examples
A market analysis of any given period requires an in-depth study of all the information available with detailed reporting. A complete set of statistical data with key indicators and other anecdotal data helps us to identify the market conditions of any given time. Even in real estate, such analysis is an absolute must. Whether it’s a realtor® or an investor, understanding the real estate market makes you a more empowered buyer or seller. Mean, Median and Mode are key factors of generating data and performing data analysis with a statistical approach.
Have a look at the video below to see the tutoring for the topic with calculation details –
New real estate professionals can develop and maintain a general awareness of the current market condition. This is accomplished through:
- Experience with the different markets throughout their real estate practice
- Anecdotal observations of real estate activity for their locale and property type
- A regular review of the available key market statistics from reliable sources
The topic of Mean, Median, Mode is covered under the Residential Real Estate Course. This is one of the basic concepts you must learn to understand how averages are taken for property prices in Real Estate. If you are applying for the Residential Real Estate Licensing Course through RECA (Real Estate Council of Alberta) and are preparing to become a Real Estate Agent or a REALTOR® in Alberta, then these topics will help you prepare for your RECA Exam.
Mean, Median, Mode
In the Real Estate Industry, we have a “Mode Sale Price”, “A Median Sale Price”, and “A Mean Sale Price”. Thus, this primer will explain the actual meanings of Mean, Median, Mode and their use in the Real Estate Industry.
You might know that mean, median, and mode are all names for “average,” but do you know how are they different? People haphazardly deploy terms like “average”, mean, median, mode and other statistical terminology without either understanding what they’re talking about themselves, or with the intent to deceive their audience with ‘fact’.
Real Estate Mean, Median and Mode
Let’s see what the definition of each of the average types is and how are they calculated differently from each other with their specific real estate examples.
Mode
The mode in mathematics is the number in a group of numbers that appears the most often. Therefore, it is the number that appears in the group more times than any other number.
It does provide a general awareness of the price at which most sales occurred for the specific locale and period indicated. However, this does not mean that the mode sale price is the sale price of every property in that locality.
The mathematical representation of this average would be as follows:
The mode is 10 in the following group of sequential numbers:
1, 5, 8, 9, 10, 10, 10, 15
Real Estate Example with Visual Representation:
Mary has a residence in the Holly Park subdivision. The sale price that occurred most often in the previous month in Holly Park was $445,000. Therefore, the mode sale price was $445,000 for that month.
Median
The median in mathematics is the number that is in the middle of a group of figures that have been sorted in a particular order. The median is the middle number, or the mid-point number, in a range of numbers that have been organized in ascending order. It does provide a general awareness of the mid-point for sale prices that occurred for the specified locale and period indicated.
Note: The key point to keep in mind here is that the data should be presented in Ascending Order to be able to calculate the Median Average of the same.
The mathematical representation of this average would be as follows:
Real Estate Example with Visual Representation:
Mike has a residence in the High Park Community. The mid-point sale price in the High Park sales for the previous month was $785,000. Therefore, the median sale price in High Park that month was $785,000. However, this does not mean that Mike’s residence is worth $785,000.
Mean
The mean in mathematics is also be referred to as the basic average. The process is to add all the values of data and divide them with the total number of values in the given data and the result you get is the Mean Average.
The mathematical representation of this average would be as follows:
A set of numbers: 45, 62, 81, 74, 93
Mean = (45 + 62 + 81 + 74 + 93) / 5
= 355 / 5
= 71
Real Estate Example with Visual Representation:
Eg: Mia has a residence in the Hilltop community. The mean (average) sale price for Hilltop for the previous month was $435,238. The average selling price is calculated by adding the total dollar volume of all Hilltop property sales and dividing the total by the number of properties sold that month. Therefor, the average sale price in Hilltop that month was $435,238. However, this does not mean that Mia’s residence is worth $435,238.
This article in a nutshell:
These are some important tips for fresh applicants who are planning to appear for the Residential Real Estate Exam by RECA but have minimal knowledge of the distribution of marks and emphasis given to each of the topics in the exam.
These will help you to plan your studies as well as the exams with a better understanding of the topics involved. You can anticipate accurate results when you are aware of these small details while you are preparing for the Residential Real Estate Exam in Alberta. Get your Residential Real Estate Course Notes from Alberta Real Estate School.
Get details of Exam Weightings with Unit-wise Distribution of Marks for Residential Real Estate – extensively from Alberta Real Estate School.
Join Alberta Real Estate School for expert help with understanding the concepts of Real Estate and getting uncommon and detailed tutoring sessions summarized as per your needs. Get our personalized Notes designed to get you through the Real Estate Exams in the first attempt! Visit our list of Real Estate Tutoring Sessions for details.
If you have any doubts for Exam Preparation of any of the real estate courses or topics, reach out to us directly at 587.936.7779.
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Happy Realtoring!!