What Is ARV in Real Estate? How Flippers Should Calculate It

ARV, or after repair value, is the price a property will sell for once it's fully renovated. It's the single most important number in a flip, because every other number in the deal, your rehab budget, your max offer, your profit, gets derived from it. Get ARV wrong and nothing downstream can save you.

This page is for flippers and wholesalers who need to underwrite a specific house. If you're still deciding whether a property is worth underwriting at all, that's a different job, covered in how to choose a house to flip. By the end of this page you'll know how to pull comps, turn them into an ARV range, and back into a max offer you can defend.

What does ARV mean in real estate?

ARV stands for after repair value: what the house is worth after the renovation is complete, not what it's worth today. A dated three-bedroom might be worth $140,000 as it sits and $240,000 with a full cosmetic renovation. The $240,000 is the ARV.

That distinction sounds obvious and gets botched constantly. As-is value tells you what you're buying. ARV tells you what you're selling. A flip is the arbitrage between the two, minus everything it costs to get from one to the other. Wholesalers live on the same number: in wholesale real estate, ARV is what your end buyer underwrites against, and experienced buyers will catch an inflated one.

One more thing before the mechanics, and it's the most important sentence on this page: ARV is an estimate, not a fact. Treat it as a range with a confidence level, never a single precise number. Anyone who hands you an ARV to the exact dollar is telling you they've never had an appraisal come in light.

How do you calculate ARV?

You calculate ARV by finding recently sold, fully renovated homes comparable to yours, adjusting for the differences, and settling on a supportable range. There's no spreadsheet formula that spits it out. The "ARV formula" people search for is really a process:

1. Pull sold comps, not active listings. Actives are asking prices; solds are evidence.
2. Filter to renovated condition. You're valuing the house after your rehab, so only homes in after-rehab condition count.
3. Stay close and recent. Same neighborhood, ideally within half a mile, sold in the last three to six months.
4. Match the bones. Similar square footage (within about 20 percent), same bed and bath count where possible, similar age and style.
5. Adjust for differences, then sanity-check the result on a price-per-square-foot basis against the comp set.

Three to five genuinely comparable sales beat fifteen loose ones. If you can't find three renovated solds near the subject, that itself is information: you're guessing, and your range needs to widen to reflect it.

Here's how tight I actually keep it. Sold comps only, never actives, and I want them closed inside the last six months. In a market that's moving fast I pull that window tighter than six. If I'm forced to stretch, twelve months is the outside edge, and only after I adjust the old sale for how the area actually moved since. On size I stay within about 200 square feet of the subject, 400 if it's a bigger house over 1,800 feet. Proximity is the one line I won't cross, literally: same neighborhood, no comp dragged in from across a major road or a rail line. Loose comps have bitten me. I once had a house of my own listed at $275,000 that the whole street was treating as the comp, and the best real offer I could pull was a $200,000 lowball. A list price is a wish. Until somebody writes a check, it isn't a comp.

How do you pick real estate comps for ARV?

The best comp is a renovated house of similar size that sold recently, a short walk from your subject. Every rule of comp selection is a version of that sentence:

• Condition is king. The number one ARV mistake is comping a future renovated house against dated solds, which caps your value at as-is levels. The reverse error, comping against new construction two price tiers up, inflates ARV and buries you.
• Recency beats similarity. A decent comp from two months ago usually tells you more than a perfect comp from a year ago, because it carries current market information.
• Distance matters more than people want it to. Half a mile in most markets. Crossing a school boundary, a busy road, or into a visibly different pocket of housing can move value 15 percent or more, and no adjustment fixes a comp from the wrong neighborhood.
• Adjustments are judgment, not math. A garage, a second bathroom, 300 extra square feet: each carries a dollar adjustment, and every adjustment is an estimate layered on an estimate. The more adjusting a comp needs, the less weight it deserves.
• Watch which way the market is moving. Comps are history; your sale is months in the future. If solds are softening and days on market are stretching, your low-end number needs to respect that. A rising market can bail out a sloppy ARV; a falling one exposes it.

Why should ARV be a range instead of one number?

Because every input to ARV is an estimate, the output can't be more precise than the inputs. Comp adjustments are judgment calls, the market will move between offer and closing, and your buyer's appraiser may weight the comps differently than you did. Stack those together and a realistic ARV sounds like "$230,000 to $250,000, and I'm confident about the bottom of that range."

Underwrite to the low end. If the deal only works at the top of your range, it's not a deal, it's a bet on everything breaking your way. The spread is also an honesty meter: a range of plus or minus 15 percent means weak comps, and the fix is better comp work or a lower offer, not optimism.

How does repair scope change ARV?

Your ARV assumes a specific finish level, so ARV and rehab budget are one decision, not two. If your comps are full-gut renovations with new kitchens, new baths, and refinished floors, you only earn that ARV by doing that scope. Budget a $30,000 paint-and-carpet rehab while comping against $80,000 renovations and your real ARV is tens of thousands below the number in your spreadsheet.

It cuts the other way too. Over-improving past what the neighborhood pays for, the $60,000 kitchen on a $220,000 street, spends money the comps prove you won't get back. Match your scope to the finish level of the comps that support your ARV, no less and not much more.

Over-renovating past the comps is one of the mistakes that cost me the most in my early years, and it never shows up as one clean loss. It bleeds out of project after project as profit you expected and didn't get. It usually starts as a cascade: you put in new floors, now the trim looks dated so you redo the trim, now the walls need paint, now the fresh paint makes the cabinets look tired so you replace those, and a $50,000 scope drifts toward $90,000 on a street that still tops out right where it always did. You don't get that extra spend back, because the range of comps in a neighborhood is a ceiling, not a suggestion. The fix is boring: match your finish level to the comps that support your ARV. If the block runs LVP and stock cabinets, that's your scope, no matter what you'd put in your own house.

What is the 70% rule and when does it break?

The 70% rule says your maximum offer is 70 percent of ARV minus repair costs. The missing 30 percent is meant to cover buying and selling costs, holding and financing costs, and your profit. It's a screening shortcut, and as a first-pass filter it's genuinely useful.

It is not underwriting, and it breaks in predictable places. On cheap houses, fixed costs eat a bigger share, so 70 percent of a $120,000 ARV rarely leaves enough margin; you may need 65. On expensive houses fixed costs shrink proportionally and 75 to 80 percent can still work. In competitive markets, 70 percent offers lose to investors who itemized their costs and can safely pay more. Use the rule to decide what's worth a full workup, then do the full workup: real closing costs, real holding months, real financing, your required profit.

A worked example: from ARV to max offer

Say you're looking at a dated three-bed and your comp work supports an ARV range of $230,000 to $250,000. Illustrative numbers:

Note the two disciplined moves: the ARV feeding the formula is the low end of the range, not the midpoint, and the $45,000 rehab is scoped to match the finish level of the comps that produced the $230,000. If the seller won't get near $116,000, you walk, and a well-defined buy box means the next candidate is already in view.

Where ARV goes wrong

Most busted flips trace back to an ARV that was wrong on the day the offer was written. The recurring failure modes:

• Comping against unrenovated solds, which caps ARV low, or against new construction, which inflates it.
• Trusting an algorithm's estimate. Automated valuations don't know condition, and condition is the whole game in a flip.
• Letting the deal set the ARV. You want the house, so you nudge comps until the spreadsheet says yes. Motivated reasoning is the most expensive habit in this business.
• Ignoring a softening market because the six-month-old comps still look great.
• Scope drift, where the rehab quietly shrinks to save budget while the ARV stays pinned to full-renovation comps.
• Single-number thinking. No range, no low-end underwriting, no room for the appraisal to come in $10,000 light.

The worst deal I ever did started as an ARV miss, before I ever closed. I tore the roof off a house, added a full second story, and built a three-car garage in the back. I listed it at $795,000 on comps I'd run before buying. It sold for $667,500 after months of price cuts. That's a six-figure loss, and the thing was dead the day I bought it: the comps were wrong, so the ARV was wrong, and there was never any margin to save it. No amount of good renovation or good marketing rescues a number you got wrong at the start.

ARV skill compounds beyond any single deal. Once you know which neighborhoods produce houses where the math works, the after-repair prices, the rehab levels buyers pay for, the spread available, you know exactly where your next deal should come from. That's the point where marketing enters: instead of underwriting whatever happens to be listed, you go generate off-market candidates in the neighborhoods your numbers already like. That's what Homebase does. You give it a target address in an area where your ARV math works, it builds a screened list of nearby homeowners more likely to sell, and it mails them in tracked waves so the next candidate calls you. The full walkthrough is on the methodology page, and how to find houses to flip covers the sourcing side in depth.