Platform · Glossary
Market estimate.
A price derived from the local market cap rate applied to the property's modeled NOI. The in-product tooltip is the precise definition: "Estimated market value based on NOI and the local market cap rate. Use this as a market sanity check against the 3Y Estimate™."
The report's market-estimate section reads: "What buyers in this market would typically pay for a property with this net operating income, based on the local market cap rate. Use it as a sanity check next to the 3Y Estimate™."
How 3Y derives it
The Market Estimate is the direct output of the capitalization valuation method applied to the property's modeled NOI:
Market Estimate = Net Operating Income ÷ Local market cap rateThe local market cap rate comes from tract-level comparables and market signals for the property's area. The NOI comes from the property's modeled income (rent, other income) minus modeled expenses (taxes, insurance, vacancy, management, maintenance, etc.).
The result is reported as a range — low, mid, high — to reflect the uncertainty in the cap rate input. A property with $30,000 NOI in a market trading at 5.5%–6.5% cap rates would show a Market Estimate band of roughly $462K–$545K.
Market estimate vs. 3Y Estimate
These are answers to two different questions:
- The market estimate answers "what will others pay?" — useful for understanding listing dynamics and competing bids
- The 3Y Estimate answers "what should you pay to hit your target?" — useful for actually making a disciplined offer
A property can have a $400K market estimate and a $360K 3Y Estimate for a buyer with a 9% cash-on-cash goal. Both numbers are correct; they describe different things. The gap between them is the price-discipline cost — what you'd give up to chase your goal at full market.
Important note.
3Y is a decision-support platform. The figures discussed on this page are illustrative and do not constitute investment, legal, tax, insurance, or appraisal advice. 3Y's estimates are not the same as an opinion of value developed by a licensed appraiser under USPAP and should not be relied upon for lending, tax, insurance, or legal purposes.