How to Calculate ARV (After Repair Value)

What ARV is, and what it is not

After repair value is a forward-looking number: the price the property should sell for after your planned renovation, in today's market. It is not what the house is worth as it sits (that is the as-is value), and it is not what it might be worth if the market rises while you hold it. When a flipper, appraiser, or hard money lender says ARV, they mean the post-renovation value supported by comparable sales that already closed.

That last clause is the discipline of the whole exercise. An ARV is only as strong as the sold comps behind it. Active listings tell you what sellers hope for; sold comps tell you what buyers actually paid. Every serious ARV starts from closed sales.

The comps method, step by step

The screening method most investors use is a price-per-square-foot average across a small set of comparable sales. It mirrors the logic of a licensed appraisal without the line-by-line adjustments, which makes it fast enough to run on every lead.

• Step 1: Find 3 to 5 homes that sold recently near your property. Closer is better, both in distance and in time. Six months is a common lookback; stretch it only when sales are thin.
• Step 2: Match the future condition of your flip, not its current one. You are pricing the renovated house, so comp against renovated sales.
• Step 3: Match the bones: similar square footage, beds, baths, lot, and age. A 2,400 sqft two-story is not a comp for a 1,100 sqft ranch.
• Step 4: Divide each comp's sold price by its square footage to get price per square foot.
• Step 5: Average those figures, then multiply by your property's finished square footage. That product is your ARV.

Choosing comps that hold up

Two rules of thumb protect you from most comp mistakes. First, prefer boring comps: the ordinary renovated sale two streets over beats the spectacular outlier with a view. Outliers pull your average toward a price your house cannot reach. Second, look at the spread. If your comps' price per square foot ranges from $210 to $220, the average is trustworthy. If it ranges from $170 to $260, you do not have a comp set, you have a scatter plot, and you should keep hunting before you trust the number.

Condition matching deserves special attention. A dated sale in original condition tells you about your purchase price, not your exit price. If you cannot find renovated comps in the immediate area, widen the radius carefully and stay inside the same school zones and price band, because crossing those lines changes the buyer pool.

Mistakes that quietly inflate ARV

Most blown flips do not fail at the renovation. They fail months earlier, in the five minutes someone spent picking comps. These are the patterns to check yourself against:

• Comping against active listings or pending sales instead of closed ones.
• Using the single best sale on the street as the whole story instead of one data point in an average.
• Ignoring the calendar: a comp from a hot spring market may not repeat in a slow winter one.
• Counting unpermitted or below-grade square footage in the subject but not in the comps.
• Rounding up because the deal needs a bigger number to work. The market does not care what your spreadsheet needs.

Adjusting for the differences that matter

No comp matches your subject perfectly, so the practical question is which differences change the price and which are noise. Buyers pay for what they can see and count: finished square footage, bed and bath count, garage spaces, lot usability, and the finish level of kitchens and baths. They rarely pay meaningful premiums for the things flippers obsess over, like which brand of appliance package went in.

Keep adjustments directional and modest. If your best comp has one more bathroom than your subject will, its price per square foot is flattering you; lean your estimate toward the lower comps. If every comp sits on a busier road than yours, you can lean slightly higher with a clear conscience. What you cannot do is stack five optimistic adjustments and call the result conservative. When more than a couple of large adjustments feel necessary, the honest conclusion is that you need different comps, not bigger corrections.

Season and trend are the final overlay. Comps closed in the past; your sale happens months in the future. In a flat market that gap is ignorable. In a moving one, look at the direction of recent closings and decide whether your ARV deserves a safety haircut. Flippers who survive down cycles describe the same habit: let the comps set the ceiling, and let the trend decide how far below it to plan.

From ARV to your maximum offer

ARV is the input; the offer is the output. Most flippers run the ARV through the 70% rule as a first screen: multiply ARV by 0.70, subtract the repair estimate, and the result is a maximum allowable offer that leaves room for profit and transaction costs. It is a screen rather than a full underwrite, but it turns your ARV into an actionable ceiling in one line of arithmetic.

The important habit is sequencing. Establish the ARV first, from comps, before you think about the offer. Investors who start from the asking price and work backward tend to find exactly the ARV they need, which is how bad deals get bought.

How FlipperPro drafts ARV for you

Inside FlipperPro, the AI Deal Underwriter pulls live comparable sales for an address and proposes an ARV with the supporting comps attached, and the Comps Research workbench lets you tighten the set yourself: filter by beds, baths, size, and sale date, select or reject comps on a map, and apply the resulting Comp ARV straight to the lead. Your job shifts from assembling data to judging it, which is where an investor's time actually earns money.

A worked example

The three comps agree within about 3%, so the average is dependable. If your comps spread much wider than that, treat the low end as your planning number.

Frequently asked questions

Keep going

• The 70% rule, explained
• How to estimate rehab costs
• 70% rule calculator (MAO)