Glossary
ARV (after repair value)
ARV, or after repair value, is the price a house should sell for once the renovation is finished. You estimate it from recent sales of similar, already renovated homes nearby, adjusted for the differences.
ARV is the top line of every flip and BRRRR deal. Your max offer, your loan size and your refi all hang off it. Get it wrong by 10% and a good deal can turn into a loss.
ARV is not today's value. Today's value is the as-is value. ARV assumes the work is done to the standard of the homes you compare against.
How to calculate ARV
- Pull 3 to 6 comps: renovated sales, close by, sold recently, similar in size, beds, baths and age.
- Adjust each comp's sale price toward your house. If the comp has something yours will not, subtract its value. If it lacks something yours will have, add it.
- Look at the adjusted prices together. Use the median or a weighted average, and lean conservative when they disagree.
- Comp A: sold $310,000, 100 sq ft larger (at $90 per sq ft)
- $310,000 - $9,000 = $301,000
- Comp B: sold $295,000, one fewer full bath (+$8,000)
- $295,000 + $8,000 = $303,000
- Comp C: sold $307,000, has a garage bay yours lacks (-$8,000)
- $307,000 - $8,000 = $299,000
Adjustment values here are illustrative. Use values that fit your market.
Run The Deal adjusts comps for size, beds, baths, age, condition, garage, lot and pool, shows each adjustment, and returns an ARV with a low to high range and an ARV confidence score. The full method is in how to calculate ARV.
Common mistakes
- Using unrenovated sales as comps. They tell you the as-is value, not the ARV.
- Picking the single best sale on the street. One outlier is not a market.
- Setting ARV above the highest renovated sale in the neighborhood without a clear reason.
- Ignoring seller concessions on comps. A $300,000 sale with $12,000 in credits really traded closer to $288,000.
Questions
How many comps do I need for ARV?
Three is a workable minimum and five is better. Fewer comps or a wide spread between them means lower confidence in the number.
Is ARV the same as appraised value?
Not always. ARV is your estimate before the work. The appraisal is the lender's opinion after it. A conservative ARV makes it more likely the two line up.
Should I use the average or the median of my comps?
The median resists outliers. A weighted average favors the closest, most recent, most similar comps. When they differ, the lower of the two is the safer planning number.
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