Question

1. Draw a scatter diagram of the house data, treating the Zestimate as the explanatory variable. Give your graph a title and labels (with units) on each axis. Comment on the association (direction and shape) you see between the Zestimate and selling price of the houses.
   1. A few points fall above (or below) the general trend of the data. Describe how the location of the point above or below the general trend is good (or bad) if you were the owner/seller of the house that just sold.
   2. A few points fall above (or below) the general trend of the data. Describe how the location of the point above or below the general trend is good (or bad) if you were the buyer of the house that just sold.
   3. What other observations did you make about the data set

sale price of the house, in dollars Zestimate of the house, in dollars 260000 271664 305000 300806 313000 330858 335000 339739 349000 357778 375000 352775 385000 407430 383500 394923 407000 396554 419000 417692 450063 455000 470000 467053 497000 521893 516000 437967 560000 562172 572500 580673 620500 648851 665500 569104 710000 691588 739000 729191 950000 995633 1080000 1229117 1350000 1333410

Answer 1

Scatter diagram of sales price of houses 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 400000 1200000 200000 600000 800000 1000000 1400000 1600000 Zestimate Sales price

The zestimate and selling price are seen to be strongly linearly related with each other as most of the points lie close to the line of regression in the scatter diagram.

If i am the owner/seller of the house, the points above the line would be good for me as my zestimate is smaller but my selling price is bigger. The points below the line would be bad for me as my zestimate would be bigger but i would have sold it at a lesser price.

If i am the buyer of the house then any point below the trend line would be good for me as the selling price of the house would be smaller than the zestimate and i would have to pay less than what was estimated. If any point lies above the trend line then it would be bad for me as i would have to pay more than the zestimate.