averaging - valuation

When analyzing a group of sales, the valuer should not average the amounts to find the market value. This is because averaging destroys or weakens useful trends that may be evident in the sales used as a group. Rather, sales should be used to support each other and particularly, the most comparable sale. The problem is shown by the following judgments:

I cannot accept as satisfactory the method used by Mr.. applying the sales he considered comparable. He took the sales of five properties and found that they had as average sheep area value with improvements new ex buildings. This method of averaging is to my mind unsound. The prices obtained at comparable sales should not be aggregated and averaged. The only safe course is to compare each sale with the subject land separately - William, J, Daandine Pastoral v Fed Comm (1943) 7 The Valuer 229.


Then again, in obtaining the average, he did what I think is not mathematically correct. He had five sales; he took the average per `acre of each of these, added then up and divided by five. There again, one cannot obtain as average in that manner: One has to take the area of each particular sale, because that gives weight to the average - Pike J, Re Collins (1936) 4 The Valuer 156.