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Median Versus Average Sales Price
Imagine 7 homes sold for these prices
Home 1 – $100,000
Home 2 - $150,000
Home 3 – $300,000
Home 4 – $500,000 --- Median Sales Price
Home 5 – $560,000
Home 6 – $700,000
Home 7 – $900,000
The Aerage Sales price would be (100,000 + 150,000 + 300,000 + 500,000 + 560,000 + 700,000 + 900,000 ) / 7 = $458,571
The median sales price would be the price of the home that sold for $500,000 because as many homes sold above that price as sold below that price. In the above example 3 homes sold for less than $500,000 and 3 homes sold for more than $500,000.
To be more dramatic, assume 3 homes sold for
Home 1 – $100,000
Home 2 - $200,000 Median Sales Price
Home 3 - $1,200,000
The average sales price would be (100,000 + 200,000 + 1,200,000) / 3 = $500,000
The median sales price would be $200,000.
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