What is a biased dataset, and how does it affect valuations?

• A. A dataset that accurately represents all groups and areas.
• B. A dataset that underrepresents or overrepresents certain groups or areas, leading to distorted valuations.
• C. A dataset collected from a single source only.
• D. A dataset that excludes relevant market data.

Answer: (D)

A biased dataset in valuations means the data used to estimate values does not reflect the true market. When relevant market data is left out, the model only sees a partial picture of prices, demand, and trends. That missing information causes the valuations to rely on incomplete signals, producing results that are systematically off from actual market values. In practice, this can lead to overvaluing some properties and undervaluing others based on what the data failed to capture. While under- or overrepresentation of certain groups or areas can also distort results, excluding relevant market data most directly creates the bias by removing crucial information the appraisal relies on to reflect real-world conditions.