Platform · Glossary
Goal-convergent valuation.
Goal-convergent valuation is a new way of thinking about valuation: instead of asking “what is this property worth in the market?”, PriceDNA asks what value is supportable for a particular investor goal and assumptions.
Goal-convergent valuation is the method. The goal-convergent price is the result. PriceDNA reports that result as the PriceDNA Estimate™.
The basic idea
Many property-analysis tools work forward: start with a price, then calculate the return, debt coverage, cash flow, or other outcome.
Goal-convergent valuation works in reverse. The investor selects a goal and provides the assumptions for the deal. PriceDNA then solves for the purchase price those numbers can support.
In practical terms, the question is:
At what purchase price would this property meet my selected goal under the assumptions used?
A third lens beside comparative and capitalization
Goal-convergent valuation can be understood alongside two common valuation lenses:
| Method | Starting point | Main question |
|---|---|---|
| Comparative valuation | Market transactions | What does market evidence support? |
| Capitalization valuation | Property income | What value does the income appear to support? |
| Goal-convergent valuation | Investor goal and deal assumptions | What price supports my goal? |
The first two lenses help describe what outside market evidence or a property’s income may support. Goal-convergent valuation answers a different question: what purchase price does the investor’s selected goal support under the assumptions being modeled?
What determines the goal-convergent price
The result can change when the selected goal or deal assumptions change.
Depending on the analysis, inputs such as financing, rent, vacancy, operating expenses, taxes, insurance, maintenance, management, reserves, closing costs, and make-ready assumptions can affect the purchase price the selected goal can support.
That resulting purchase price is the goal-convergent price.
When PriceDNA applies the method to a specific property and selected goal, PriceDNA reports that result as the PriceDNA Estimate™.
What this is not
Goal-convergent valuation is not an appraisal, comparable-sales valuation, prediction of market value, or prediction of what a property will sell for.
It is a decision-support method for understanding what purchase price a selected investor goal can support under the assumptions used.