ARV (After-Repair Value)
ARV is the estimated market value of a property after renovations are complete. It is the anchor number for fix-and-flip profit and BRRRR refinance calculations. Everything else — your maximum offer, your profit margin, your refinance proceeds — flows from whether your ARV estimate is accurate.
Getting ARV wrong is the most common way new flippers lose money. An ARV that is $30,000 too high can turn a projected profit into a loss.
What ARV is not
ARV is not:
- An automated estimate (Zestimate, AVM) — automated tools lag the market and do not reflect renovation quality
- An appraisal — an appraisal is an opinion of current value, not post-renovation value
- A guess based on what you need it to be — this is the most dangerous form
ARV is your best evidence-based estimate of what the renovated property will sell or appraise for, based on comparable sales.
How to estimate ARV
Step 1: Pull comparable sales (comps)
- Closed sales only — not active listings, not pending sales
- Within 0.5–1 mile of the subject property
- Sold within the last 90–180 days
- Similar size (within 15–20% of square footage)
- Similar bed/bath count
- In fully renovated or updated condition
Step 2: Adjust for differences Apply adjustments for size, bed/bath, age, and condition. Most investors use a $/sq ft comparison as a starting point, then adjust.
Step 3: Bracket your estimate Use 3–5 comps. Note the low, mid, and high. Conservative investors use a number closer to the low end.
Worked example
A distressed single-family home at 1,450 sq ft, 3 bed/2 bath, needs full renovation.
Step 1 — Comparable renovated sales nearby:
| Address | Sq ft | Bed/Bath | Sold price | $/sq ft | Days ago |
|---|---|---|---|---|---|
| 412 Maple St | 1,380 | 3/2 | $278,000 | $201 | 45 |
| 88 Oak Ave | 1,510 | 3/2 | $302,000 | $200 | 62 |
| 201 Birch Ln | 1,490 | 3/2 | $289,000 | $194 | 28 |
Step 2 — Adjustment: Average $/sq ft of comps = $198. The subject property has slightly dated layout; conservative adjustment to $193/sq ft.
Step 3 — ARV estimate: 1,450 × $193 = $279,850 → ARV: $280,000
With the range from $278K to $302K, using $280K is conservative — appropriate for a first-time flip.
ARV in fix-and-flip vs. BRRRR
| Use case | How ARV is used |
|---|---|
| Fix-and-flip | ARV determines your exit sale price — subtract all costs to get profit |
| BRRRR | ARV determines the refinance appraisal — drives how much equity you can pull out |
| Max offer | 70% rule: MAO = (ARV × 0.70) − rehab costs |
In BRRRR, the refinance lender orders an appraisal after renovation. If your ARV estimate was high, the appraisal comes in below expectations and you get less cash out — or you cannot refinance at all without bringing cash to closing.
What affects ARV accuracy
| Factor | Impact |
|---|---|
| Stale comps (90+ days old) | Markets move; stale data overstates or understates ARV |
| Over-improving for the neighborhood | Finishes that exceed neighborhood norms do not add proportional value |
| Wrong comp selection | Using comps in a better neighborhood inflates ARV |
| Ignoring condition adjustments | Counting a comp at full value that had a newer roof or updated kitchen you are not matching |
Common mistakes
1. Using the Zestimate or AVM as ARV. Automated valuations do not reflect renovation quality, current condition, or very recent sales. They are a rough directional indicator, not an underwriting tool.
2. Picking the highest comp as the target. The highest comp sold at the top of the market or may have had features your renovation will not match. Use the median, or go conservative.
3. Not accounting for market trend. In a softening market, your ARV from 60 days ago may already be stale. Add a 2–5% haircut if the market is cooling.
4. Conflating ARV with current appraisal. ARV is a projection of future value. An appraiser evaluates the property as-is. These are different numbers used for different purposes.
Frequently asked questions
How many comps do I need for a reliable ARV? At least three, ideally five. Fewer than three creates too much uncertainty. If you cannot find three comps within 0.5 miles and 90 days, expand to 1 mile or 180 days, but document why and apply a larger uncertainty buffer.
Can I get a professional ARV before buying? Yes — some investors hire a local appraiser to do a "desk review" or "drive-by ARV estimate" before closing. It costs $200–$400 and can prevent costly errors. For large renovations, it is worth it.
What if the neighborhood has few sales? Use a wider radius or longer time window, but adjust for market direction. In thin markets, ARV estimates carry more uncertainty — reduce your offer accordingly (use a lower percentage than 70%).
Does ARV change during renovation? The market can shift while you are renovating. A renovation that takes 8 months in a softening market may produce a lower ARV than your original estimate. Build a buffer and avoid renovations that run significantly over schedule.
ARV is an analytical estimate, not investment advice. Comparable sales data and renovation outcomes vary by market and property. Always verify with a licensed professional before making investment decisions.