The two prices answer different questions
The asking price tells you what the seller is currently asking. The 3Y Estimate tells you what price the property’s modeled income, expenses, financing, and your selected goal can support.
A property can be reasonably priced relative to the broader market and still fail a particular investor’s goal. It can also meet the investor’s goal at the asking price even though the surrounding market carries other risks. 3Y keeps those questions separate.
How to read the gap
Gap analysis compares the asking price with the 3Y Estimate:
Gap amount = Asking price − 3Y Estimate
A positive gap means the asking price is above the goal-convergent price. A negative gap means the asking price is below it. A zero gap means the asking price meets the selected goal under the current assumptions.
The report treats an asking price up to 5% above the 3Y Estimate as a small gap that may sometimes be addressed through routine negotiation or minor concessions. A gap above 5% and up to 15% may require a meaningful price reduction, seller concessions, or stronger assumptions supported by the deal data. Above 15%, routine negotiation alone may not be enough.
These ranges interpret the modeled relationship. They do not predict what the seller will accept and do not recommend an offer.
What can change the result
The gap may change when a real deal input changes, including:
- verified rent or other income;
- supported operating expenses;
- loan terms;
- down payment when financing remains a meaningful lever;
- the selected goal, provided it still preserves the investor’s minimum return and cash-flow requirements; or
- the purchase price or seller concessions.
Do not change assumptions only to force the 3Y Estimate closer to the asking price. Update them when you have better evidence, such as a rent roll, insurance quote, contractor estimate, tax record, utility responsibility, or firm lending terms.
Different from a conservative-default question
Conservative defaults can contribute to a lower estimate, but a price gap does not automatically mean the defaults are too conservative. The gap may simply show that the asking price does not support the selected goal under the current assumptions.
What the gap does not decide
Gap analysis does not tell you what to offer, whether to buy, or what the seller will accept. It makes the tradeoff visible so you can validate the assumptions, compare scenarios, conduct due diligence, and make your own decision.