What is ARV in Real Estate? After Repair Value Explained
ARV stands for After Repair Value. It is the estimated market value of a property after all planned renovations and repairs are completed. ARV is the single most important number in any fix-and-flip or wholesale deal because it determines what the property is worth to an end buyer and, by extension, how much you can pay for it. Every deal evaluation in real estate investing starts with this question: what will this property be worth when it is fixed up?
How to calculate ARV
ARV is calculated by analyzing comparable sales (comps) of similar properties that have recently sold in renovated condition near the subject property. The process looks like this:
- Find 3-6 comparable sales. Look for properties that sold within the last 6-12 months, within 0.5-1 mile of your subject property, with similar square footage (within 15-20%), similar bed/bath count, similar lot size, and in similar or better condition (renovated or updated).
- Adjust for differences. No comp is identical. Make adjustments for differences in square footage, lot size, garage, pool, age, upgrades, and location. For example, if your subject property is 1,800 sqft and a comp that sold for $300,000 is 2,000 sqft, you might adjust downward by $20,000-$30,000 for the missing 200 sqft.
- Calculate the adjusted average. After adjustments, average the comp values. Weight the most similar comps more heavily.
Example calculation: Subject property is a 3/2, 1,600 sqft home needing a full renovation.
Comp 1: 3/2, 1,650 sqft, renovated, sold $285,000 (adjusted: $280,000)
Comp 2: 3/2, 1,550 sqft, renovated, sold $275,000 (adjusted: $278,000)
Comp 3: 4/2, 1,700 sqft, renovated, sold $295,000 (adjusted: $282,000)
ARV estimate: $280,000 (average of adjusted values)
Why ARV matters for wholesalers
If you are wholesaling, you need to know the ARV so your buyers trust your deal analysis. Cash buyers and flippers will run their own comps, and if your ARV is inflated, you lose credibility and the deal falls apart. An accurate ARV gives your buyer confidence that the numbers work.
The 70% rule is the most common formula investors use to determine their maximum offer price based on ARV:
Maximum Offer = (ARV x 70%) - Repair Costs
Example: ARV of $280,000 x 0.70 = $196,000 - $45,000 repairs = $151,000 max offer
As a wholesaler, you need to buy below that number to leave room for your assignment fee. If the max offer for a flipper is $151,000, you might need to get it under contract at $130,000-$140,000 to make a reasonable assignment fee.
Finding good comps
The quality of your ARV depends entirely on the quality of your comps. Here is what to prioritize:
- Recency. Comps within the last 3-6 months are ideal. Up to 12 months is acceptable in slower markets. Anything older than 12 months is unreliable because market conditions change.
- Proximity. The closer the better. Same subdivision is ideal. Same neighborhood is good. Same zip code is the outer limit for most markets. Be careful crossing major roads, school district boundaries, or flood zones, as these can significantly affect value.
- Similarity. Match the subject property's characteristics as closely as possible. A 3/2 ranch should be compared to other 3/2 ranches, not 5/3 two-stories. Square footage should be within 15-20%.
- Condition. Your ARV assumes the property will be in renovated condition, so your comps should be renovated properties. Look for listings with terms like "completely remodeled," "new kitchen and baths," or "turnkey." Avoid comps that sold as-is or in distressed condition.
Data sources for comps include the MLS (most accurate and current), county records (public but often lagging), and property data platforms. Our detailed ARV calculation guide covers the process of pulling and adjusting comps in depth.
Common ARV mistakes
The most expensive mistake investors make is overestimating ARV. Here are the most common errors:
- Cherry-picking high comps. Using only the highest comparable sales while ignoring lower ones that are equally valid. Always use a range and be conservative.
- Ignoring condition differences. Not all "renovated" properties are equal. A property with a $100,000 high-end renovation will sell for more than one with a $40,000 builder-grade rehab. Match the renovation level to what your buyer will actually do.
- Using active listings as comps. Active listings are asking prices, not sold prices. They tell you what sellers hope to get, not what buyers actually pay. Only use closed sales for ARV.
- Crossing market boundaries. Properties on different sides of a highway, school district line, or flood zone boundary can have dramatically different values even if they are physically close together.
- Outdated comps in changing markets. In a declining market, 6-month-old comps may overstate current value. In an appreciating market, they may understate it. Always consider the market trend.
ARV for different exit strategies
ARV is primarily associated with fix-and-flip deals, but it applies to every exit strategy:
- Fix and flip. ARV is the expected sale price after renovation. This is the textbook use case.
- Wholesale. You need ARV to present accurate deal packages to buyers. Buyers will verify your ARV before committing.
- BRRRR. ARV determines the refinance value. After renovation, the property is appraised and you refinance based on the new value. A higher ARV means you can pull more cash out during the refinance. See our BRRRR method guide for details.
- Buy and hold. Even if you are not flipping, knowing the ARV helps you understand the equity position and the property's value as collateral for future borrowing.
AI-powered ARV analysis
Modern deal analysis tools use AI to speed up the comp selection process and reduce human bias. AI can analyze hundreds of recent sales, score them for similarity to the subject property, and suggest an ARV range in seconds rather than the hours it takes to do manually. This does not replace your judgment, but it gives you a solid starting point and helps you catch comps you might have missed.
Deal Run provides AI-powered ARV analysis that pulls recent comparable sales, scores them by relevance, and calculates an estimated value range so you can evaluate deals faster.