Platform · Glossary
Market estimate.
An estimated price based on outside market evidence. A market estimate may be informed by comparable property sales, an income stream translated through an applied market cap rate, or a combination of market-oriented inputs.
A market estimate answers an external-reference question: what price does the market evidence appear to support? It does not answer whether that price works for a particular investor’s goal.
Two market-oriented valuation methods
Two widely used approaches can contribute to a market estimate:
| Valuation method | Starting point | Question answered |
|---|---|---|
| Comparative valuation | Similar property sales | What have comparable properties sold for? |
| Capitalization valuation | Income stream and an applied market cap rate | What price does the income support at that cap rate? |
Under the capitalization valuation method:
Market-oriented value = Net Operating Income ÷ Applied Market Cap Rate
For example, if a property produces $30,000 of annual net operating income and a buyer applies a 6.0% cap rate, capitalization valuation indicates a price of $500,000.
That output depends heavily on the cap rate applied. Cap rates vary by property type, condition, location, operating profile, buyer expectations, and broader financing conditions. A market estimate based on capitalization is therefore a contextual valuation lens, not a universal answer.
Market estimate versus goal-convergent valuation
Market-oriented valuation and goal-convergent valuation answer different questions:
| Valuation lens | Reference point | Question answered |
|---|---|---|
| Market estimate | Comparable sales or an applied market cap rate | What price does outside market evidence support? |
| Goal-convergent valuation | Investor goal and modeled financial profile | How much can I pay and still reach my goal? |
A market estimate may help explain external pricing context. But the market does not know an investor’s required return, desired cash flow, debt coverage target, financing terms, or operating strategy.
A property can be reasonably priced relative to the market and still fail an investor’s goal.
Where 3Y focuses
3Y focuses on the target price the investor can act on: the 3Y Estimate™, or goal-convergent price. It is calculated from the property’s modeled income and expenses, financing terms, and the investor’s selected goal.
On a live deal, the asking price is the market-facing number already in front of the investor. The 3Y Estimate shows the price the investor’s selected goal can support — and whether the asking price fits within it.
The market may have a price. The investor has a goal.