Why this can happen
3Y is designed to help you understand what price your goal can support. Conservative assumptions can make the estimate look lower than an asking price or a more optimistic back-of-the-envelope calculation.
Examples of conservative assumptions
The analysis can account for real-world costs that investors sometimes understate or leave out, including closing costs, vacancy, operating expenses, reserves, repairs, insurance, management, make-ready, and financing assumptions. When those costs are higher, the price your selected goal can support may be lower.
Closing costs and upfront investment
Closing costs are part of the upfront cost of getting into the deal. Including them gives a more complete view of the cash and total investment required, instead of treating the purchase price as the only cost that matters.
When to adjust assumptions
Adjust assumptions when you have a property-specific reason. For example, you may have a verified rent roll, a firm insurance quote, a contractor estimate, or financing terms that differ from the defaults.
What not to do
Do not adjust assumptions only to force the estimate closer to the asking price. The point of the estimate is to show what the deal can support under the assumptions used.