Mean, median and outlier prices

When you collect several comparables, do not look only at the arithmetic mean.

Imagine five prices: €650, €690, €700, €720 and €1,300. The average rises sharply because of the last observation, while most of the market is clearly concentrated around €700.

With small samples it is often useful to look at the median, the central observation, together with the range where most prices cluster. Outliers should not automatically be deleted: they may represent an exceptional example, a pricing error or an urgent sale.

Before using an extreme value, ask why it is different. A good valuation interprets the data rather than merely calculating it.