What is After Repair Value (ARV)?
After Repair Value (ARV) is the estimated market value of a property after all planned renovations and repairs are complete. It is the most important number in fix-and-flip investing and one of the two critical metrics (alongside ARR) in wholesale deal analysis. Every investment decision in the flip world flows backward from the ARV: what you can pay for the property, how much you can spend on repairs, and whether the deal is worth pursuing at all.
ARV is not a guess. It is calculated from comparable sales -- recently sold properties that are similar to what your subject property will look like after renovation. When done correctly, ARV gives you a reliable estimate of the exit price. When done poorly, it can lead to overpaying for a property, underestimating your renovation budget, or promising buyers a return that doesn't materialize.
The ARV formula
At its core, ARV is straightforward:
ARV = Average Adjusted Sale Price of Comparable Properties
The key phrase is "adjusted." Raw sold prices from nearby homes are your starting point, but they need to be adjusted for differences between each comp and your subject property. A comp that sold for $280,000 with 4 bedrooms is not directly comparable to your 3-bedroom subject property. You need to adjust downward for the missing bedroom. Conversely, if your subject has a larger lot or a newer roof, you adjust upward.
Here's how the process works step by step:
- Identify 3-6 comparable sales -- recently sold properties within a reasonable distance that are similar in size, age, style, and condition to what your subject will look like after renovation.
- Adjust each comp for meaningful differences: square footage (typically $50-$120/sqft depending on market), bedroom/bathroom count ($5,000-$15,000 per), garage ($10,000-$25,000), lot size, age, pool, and condition.
- Average the adjusted values to arrive at your ARV. Some investors weight the closest and most similar comps more heavily.
How to select good comps
Comp selection is where most ARV mistakes happen. The quality of your ARV is only as good as the comps you choose. Here are the criteria that matter most, in order of importance:
Distance
Closer is better. Ideally, your comps are within 0.25 to 0.5 miles of the subject property. You can extend to 1 mile in suburban areas or 2 miles in rural areas if necessary, but every additional distance introduces more market variability. Comps across a major highway, school district boundary, or in a different neighborhood are less reliable even if they're geographically close.
Recency
More recent is better. Sales within the last 6 months are ideal. You can use sales up to 12 months old if the market has been stable. In rapidly appreciating or depreciating markets, even 6-month-old comps may need time adjustments. Never use comps older than 12 months for ARV -- the market has changed too much.
Physical similarity
Match the property type (single family to single family, not single family to condo), square footage (within 20%), bedroom and bathroom count (within one), year built (within 10-15 years), and style (ranch to ranch, two-story to two-story). The more similar the comp, the fewer adjustments you need, and fewer adjustments means a more reliable estimate.
Condition
This is the most commonly overlooked factor. Your ARV should represent the property in its post-renovation condition. So your comps should be properties that were in similar post-renovation condition when they sold. A comp that sold as-is in rough shape will understate your ARV. A comp that's a luxury flip with high-end finishes will overstate it. Look for comps that match the level of renovation you're planning.
ARV vs. AVM: what's the difference?
An AVM (Automated Valuation Model) is a computer-generated property value estimate, like Zillow's Zestimate or the values that show up in county tax records and data platforms. AVMs use algorithms that factor in recent sales, tax assessments, and property characteristics to spit out a number.
AVMs are not ARVs. An AVM estimates what the property is worth in its current condition. It doesn't account for planned renovations. It doesn't select comps based on post-renovation condition. And it doesn't make the nuanced adjustments that a human analyst or experienced investor would make. AVMs are useful as a starting reference point, but relying on them for investment decisions is a recipe for overpaying.
The practical difference can be significant. A distressed property might have an AVM of $180,000 (reflecting its current poor condition) and an ARV of $280,000 (reflecting what it will be worth after a $60,000 renovation). The AVM tells you what the market thinks it's worth right now. The ARV tells you what you're building toward. They serve completely different purposes.
Three methods to calculate ARV
1. Manual comp analysis
Pull sold comps from the MLS (if you have access), county records, or a data platform like PropStream or Deal Run. Select 3-6 that meet the distance, recency, and similarity criteria. Make adjustments. Average. This is the gold standard and what appraisers do, but it takes 30-60 minutes per property and requires experience with adjustments.
2. Per-square-foot method
Find the average price per square foot for recently sold, renovated properties in the area, then multiply by your subject's square footage. For example, if renovated homes are selling for $150/sqft and your subject is 1,800 sqft, the ARV is approximately $270,000. This is faster but less precise because it doesn't account for specific features.
3. AI-powered comp analysis
Modern tools use algorithms that pull comps automatically, score them for similarity (factoring in distance, size, age, condition, and recency), and calculate an adjusted ARV. Deal Run's comp analysis uses AI condition scoring to match comps not just on physical characteristics but on renovation level, producing ARV estimates with a median absolute error of 3.28%. This combines the accuracy of manual analysis with the speed of automation.
Common ARV mistakes
Cherry-picking high comps
Selecting only the highest-priced sales to inflate your ARV is the fastest way to lose money -- or lose a buyer's trust. Include the full range of relevant comps, including ones that sold for less than you'd like. If the range is $250K-$310K, your ARV is somewhere in that range, not at the top of it.
Ignoring active and pending listings
Sold comps tell you where the market was. Active and pending listings tell you where it's going. If there are 12 similar properties actively listed at $260K and your sold comps suggest $290K, the market may be softening. Always check current inventory alongside historical sales.
Using comps from different neighborhoods
A property one mile north might be in a completely different school district, HOA, or neighborhood dynamic. Physical distance alone doesn't make a good comp. The comp needs to be in a comparable neighborhood that attracts the same buyer pool.
Overestimating renovation quality
Your ARV should match the level of renovation you're actually going to do. If you're planning a standard investor-grade rehab (LVP flooring, granite counters, basic fixtures), don't use comps from luxury flips with custom tile, quartz waterfalls, and designer fixtures. Be honest about what you're building and comp accordingly.
How Deal Run calculates ARV
Deal Run pulls comparable sales automatically from MLS and public records data, then scores each comp using AI that evaluates not just distance and size, but condition and renovation level. The system identifies the most relevant comps, applies adjustments, and presents both an AI-calculated ARV and the underlying comp data so you can verify and override if needed. You can also use our free ARV calculator to run quick estimates.
For a deeper dive into the ARV vs ARR decision, see our guide on ARV vs ARR: Which Matters for Your Exit Strategy.