ARV Defined
ARV, or after-repair value, is the estimated market value of a property once a defined scope of renovation is complete. It is not the property's current value, and it is not what the seller is asking — it's what a buyer would actually pay for the home once it looks like the renovated comps in the neighborhood.
Every other number in a flip — maximum offer, rehab budget, financing amount, expected profit — is derived from ARV. An ARV that's off by 10% doesn't create a small error; it compounds through the entire deal.
How ARV Is Calculated
ARV is built from comparable sales, the same method an appraiser uses:
- Pull 3–6 closed sales of renovated homes, not active listings
- Comps should be within roughly 0.5 miles and sold in the last 3–6 months
- Match on size, bed/bath count, lot size, and renovation quality as closely as possible
- Adjust each comp up or down for differences (an extra bathroom, a bigger lot, a busier street)
- Average the adjusted price per square foot, then multiply by the subject property's square footage
| Comp | Sold Price | Sqft | $/Sqft |
|---|---|---|---|
| 123 Comp St (0.2 mi) | $652,000 | 1,540 | $423 |
| 456 Sample Ave (0.4 mi) | $638,000 | 1,480 | $431 |
| 789 Example Dr (0.3 mi) | $665,000 | 1,610 | $413 |
| Average $/sqft | $422 | ||
| Subject property (1,540 sqft) | ARV ≈ $650,000 | ||
Common ARV Mistakes
- Using active listings instead of solds. An asking price reflects hope, not what buyers actually paid.
- Skipping adjustments. A comp with a pool, an extra bedroom, or a busier street needs a dollar adjustment, not a shrug.
- Comping across dissimilar micro-markets. Two homes 0.4 miles apart can sit in very different school zones or price tiers.
- Over-improving beyond the neighborhood ceiling. A $150,000 renovation doesn't raise ARV past what the best comp in the area has ever sold for.
Have an ARV estimate? Plug it into the full profit calculator to see your maximum offer, holding costs, agent fees, and net profit together.
Open the Profit CalculatorHow Comp Adjustments Actually Work
The step investors skip most often isn't finding comps — it's adjusting them. Two renovated homes rarely sell for the same $/sqft just because they're nearby; each difference between the comp and the subject property needs a dollar value attached to it, added or subtracted, before you average anything.
| Adjustment Factor | Comp Has It, Subject Doesn't | Typical Adjustment |
|---|---|---|
| Extra bathroom | Yes | −$8,000–$12,000 |
| Two-car garage vs. carport | Yes | −$10,000–$15,000 |
| Pool | Yes | −$15,000–$25,000 |
| Busier street / backs to arterial | No (comp is quieter) | +$10,000–$20,000 |
| Larger lot (+2,000 sqft) | Yes | −$5,000–$10,000 |
Applied to the earlier example: if Comp 1 at $652,000 has a pool the subject property lacks, you'd subtract roughly $18,000 before folding it into the $/sqft average, since that comp's price is partly paying for an amenity the subject won't have on closing day. Skip this step across all three comps and the average $/sqft — and therefore the ARV — can land 3–6% high, which on a $650,000 flip is $20,000–$40,000 of ARV that doesn't actually exist.
A practical way to sanity-check your own adjustments: after adjusting, the spread between your comps' adjusted $/sqft figures should tighten, not widen. If Comp 1 and Comp 2 were $423 and $431 per square foot unadjusted and land at $429 and $427 after adjustment, that convergence is a sign the adjustments are doing their job. If the spread gets wider after adjusting, revisit the adjustment amounts — something is probably being double-counted or missed.
Where adjustment amounts come from matters too. The most reliable source is paired-sales analysis: finding two otherwise-similar recent sales where the only meaningful difference is the one feature you're trying to value, then reading the price gap directly off the market. A local appraiser or a real estate agent working the neighborhood daily will usually have a feel for these numbers; a generic online adjustment calculator will not, since pool premiums, garage premiums, and lot-size premiums vary block to block, not just city to city.