Glossary · Valuation

After Repair Value (ARV)

The estimated market value of a property after planned renovations are complete. The single most leverage-sensitive number in any fix and flip or BRRRR underwrite.

Definition

After Repair Value (ARV) is the projected resale or appraised value of a property once a defined scope of renovation is finished. ARV is the single most leverage-sensitive number in a fix and flip or BRRRR underwrite — every downstream metric (projected profit, ROI, maximum allowable offer, hard-money loan amount, refinance proceeds) flows directly from it.

A 5% miss on ARV typically wipes 20–40% off projected profit. There is no other input in residential real estate underwriting where small errors compound this aggressively — which is why ARV deserves more attention than any other number on the spreadsheet.

Formula

ARV ≈ Median renovated comp $/sqft × subject finished sqft, adjusted for parity

The formula is conceptually simple. The discipline lives in two places: the comp set you use, and the parity adjustments you apply. Both are where retail ARV calculations go wrong.

Worked example

A 1,800 sqft single-family home is planned for fix and flip. Five renovated comps within 0.5 miles closed in the last 90 days at the following prices and square footages:

$480,000 / 1,750 sqft = $274/sqft
$525,000 / 1,850 sqft = $284/sqft
$495,000 / 1,820 sqft = $272/sqft
$510,000 / 1,790 sqft = $285/sqft
$490,000 / 1,770 sqft = $277/sqft

Median $/sqft is $277. Subject sqft is 1,800. Base ARV:

$277 × 1,800 = $498,600

With five high-parity comps and a tight per-sqft range (under 8% spread), this qualifies as a high-confidence ARV. The number is defensible.

The 5-step ARV method

1. Define the subject property precisely

Write down post-renovation square footage, bed and bath count, lot size, garage configuration, finish tier, and any structural changes. The comp set must match the finished state, not the current distressed state.

2. Pull comparable sales — three filters in order

Recency: closed sales within 90 days, preferred. Extend to 180 in thin markets. Never beyond 365.
Distance: within 0.5 miles in uniform neighborhoods. Within 1.0 mile only when crossing into different school districts or HOAs materially changes value.
Parity: renovated, similar finish tier, within 10% of subject square footage, same bed and bath count where possible.

3. Compute median $/sqft

For each comp, divide sold price by finished living square footage. Take the median, not the mean — the median is robust to a single outlier comp. If you have 5+ comps, also discard the highest and lowest before computing.

4. Apply parity adjustments

Lot: +5% for a usable lot 50%+ larger than comp median; -5% for a flag lot or steep slope.
View / location: +3–10% for a defensible view; -3–7% for backing a freeway or commercial.
Garage: +2% per additional bay; -3% if subject is carport vs garage comps.
Finish tier: +5–10% for designer finishes above comp median; -5% if subject will be builder-grade.

5. Confidence-weight the result

High confidence: 5+ comps, all within 90 days and 0.5 miles, per-sqft range within 8%. Trust the ARV.
Medium confidence: 3–4 comps, mix of 90–180 days, range within 15%. Underwrite at 95% of base ARV.
Low confidence: 1–2 comps, or per-sqft range wider than 20%. Underwrite at 90% of base ARV — or walk away.

The three most common ARV mistakes

Using listing prices. Listings are wishes. Only closed sales count.
Using non-renovated comps. A distressed- condition comp tells you nothing about post-renovation value. Filter ruthlessly.
Stretching distance. A comp 1.5 miles away in a different school district is worse than no comp. Better to flag low confidence and underwrite conservatively.

How DealIntel computes ARV

DealIntel runs the comp-engine version of this method on every deal — confidence-weighted, with per-comp recency, distance, size, and renovation-parity scoring exposed in the UI. Every ARV figure on the platform carries a confidence score so users see the inference layer behind the number. Low-confidence comp sets trigger a Kill List flag so the deal is reviewed before an offer is drafted.

Try the ARV calculator for a free standalone version of the methodology. For a real-deal evaluation with the full 25-point Kill List and six-strategy comparison, see how DealIntel evaluates a deal.

Frequently asked questions

What is ARV in real estate?

ARV stands for After Repair Value — the estimated market value of a property after a defined scope of renovation is complete. It is the projected resale or appraised value, not the current as-is value of the distressed property.

How do you calculate ARV?

Pull renovated comparable sales (closed within 90 days, within 0.5 miles, similar finish tier, within 10% of subject square footage). Compute price per square foot for each comp. Take the median across the set. Multiply by subject finished square footage. Apply parity adjustments for lot, view, finish tier. Confidence-weight the result by comp set quality.

How accurate is ARV?

ARV is as accurate as the comp set behind it. Five high-parity comps within 90 days and 0.5 miles produce a tight, defensible ARV. One or two comps produce a guess. A 5% miss on ARV typically wipes 20–40% off projected fix and flip profit — confidence weighting matters more than the raw number.

What is the difference between ARV and appraised value?

ARV is the projected post-renovation value before any work is done — used during underwriting to size the offer. Appraised value is the actual value determined by a licensed appraiser after work is complete — used by lenders at refinance or buyer financing. ARV should converge to appraised value if the underwrite was disciplined.

Should I use Zillow Zestimate for ARV?

No. Zestimate is an algorithmic estimate of as-is value, not post-renovation value. It includes distressed comps, non-parity properties, and outdated sales. For ARV, use renovated closed comps filtered manually or via an institutional platform. Zestimate is a sanity check, not an underwriting input.

What is a good ARV margin for a fix and flip?

The 70% rule produces an offer ceiling that targets roughly 20–25% gross profit margin on ARV. Below 15% margin the deal lacks buffer for rehab overrun, timeline slippage, or comp drift. Above 30% margin signals either an unusually motivated seller or an unrealistic ARV — always re-check the comp set when projected margin looks too generous.

Does ARV include the lot value?

Yes, implicitly. ARV is the total post-renovation property value — building plus lot — because that is what comparable sales reflect. The lot's contribution to value is already embedded in the comp prices used to derive the median $/sqft.

How often should I recompute ARV during the project?

Every 30 days minimum, and immediately on any major market signal: a comparable sale closing in the neighborhood, a noticeable shift in days-on-market, or a rate move that affects buyer purchasing power. Long projects (12+ months) often see ARV drift 5–10% from initial underwrite — early detection lets you adjust scope or list price before listing.

Related terms

DealIntel runs the institutional ARV method on every deal — with confidence scoring, Kill List flags for thin comp sets, and side-by-side strategy comparison.

Start free →