How to Calculate After Repair Value (ARV), With a Worksheet

What is after repair value?

After repair value (ARV) is the estimated market value of a property once your planned renovation is complete. It is not today's value and it is not the highest sale on the street. It is what a typical buyer would likely pay for your house, in the condition your scope of work will deliver.

Lenders use ARV to cap loans. Flip lenders, including Axelrad (see the fix-and-flip page), cap the total loan at a percentage of ARV, so the ARV you submit has to hold up to review.

Is there a simple ARV formula?

The short version people quote is:

ARV = average adjusted sale price of comparable renovated homes

Some people use price per square foot times your square footage as a shortcut. It is useful as a sanity check but weak on its own, because buyers pay for bedrooms, baths, lot, and location, not just square feet.

Step 1: How do you choose comps for ARV?

Good comps share as many of these traits with your finished property as possible:

• Sold (closed), not active or pending
• Recent: the last few months is best; widen only if you must
• Close: same subdivision or the same side of any major dividing line
• Similar style, age, bed and bath count, and square footage (within about 10-20%)
• Renovated to a level similar to your scope
• Arm's-length sales, not foreclosures or family transfers, unless that is the market

Pull more than you need and throw out the outliers. Three strong comps beat eight weak ones.

Step 2: How do you adjust comps?

Adjust each comp toward your subject. If a comp has something your finished house won't have, subtract value. If your house will have something the comp lacks, add value. Base adjustment amounts on local evidence (paired sales or an agent's or appraiser's input), not a national rule of thumb.

ARV worksheet: worked example

Example (hypothetical numbers): subject will be a 3 bed / 2 bath, 1,500 sq ft, with a renovated kitchen and a one-car garage.

The adjusted prices cluster around $320,000. A reasonable reconciled ARV here is about $320,000. If the three adjusted prices were far apart, you'd need better comps, not an average.

Step 3: How do you reconcile to one number?

Give the most weight to the comp that needed the smallest adjustments, since it is the closest match. Then ask whether the number makes sense against active listings and pending sales. If competing listings at your price are sitting, your ARV may be optimistic.

Step 4: Stress-test the ARV

Run your deal at your ARV and again at a lower number, such as 5% and 10% under. Example (hypothetical numbers): at a $320,000 ARV, 10% lower is $288,000. If the deal only works at the top number, the margin is too thin to survive a slow market or an appraisal that comes in low.

ARV worksheet: enter your comps

For each comp, take the closed sale price and add or subtract your adjustments for differences from your finished house; the average of the three adjusted values is your starting ARV. Enter a subtraction as a negative number, for example -8000.

Also write down, for each comp, the address, sale date, distance from your subject, beds, baths and square footage, and whether its condition is better than, the same as, or worse than your finished scope.

What mistakes inflate ARV?

• Using active listing prices instead of closed sales
• Comparing to a higher-end renovation than your budget will deliver
• Crossing a school, highway, or neighborhood boundary to find a higher sale
• Ignoring that your house backs to a busy road or commercial lot
• Adding value for every upgrade at full cost; buyers rarely pay dollar for dollar

Who can help you check an ARV?

You don't have to do it alone. A local agent who sells renovated homes can tell you what buyers in that neighborhood pay for and what they ignore. An appraiser can explain how adjustments are usually supported in your market. Contractors can tell you whether your scope actually delivers the finish level your comps show. Ask each of them the same question: "If this house were finished to this scope, what would it sell for, and which sales support that?" When their answers land near yours, you can submit with confidence.

Key takeaways

• ARV is the likely finished market value, supported by closed, similar, nearby renovated sales.
• Adjust comps toward your subject using local evidence, then reconcile, with weight on the closest matches.
• Stress-test at a lower ARV before you commit.
• Lenders cap loans on ARV, so a supported number speeds up review.

Put your ARV to work

Once your worksheet is done, plug it into the calculator on the fix-and-flip loan page, then submit the deal with your comps attached.