How to Estimate ARV (After-Repair Value)

The single number that decides whether a flip or a BRRRR works — and the one most often estimated with hope.

8% low = $15k

What a modest ARV miss costs on a deal bought at the 70% line.

Why this number carries so much weight

After-repair value is the finished, market-ready price of the property. It sets your maximum offer under the 70% rule, and it sets your refinance proceeds in a BRRRR, where the lender will lend a percentage of it. It appears twice, and an error in it is therefore paid for twice.

It is also the estimate most vulnerable to wishful thinking, because unlike a rehab budget nobody sends you an invoice that proves you were wrong. You find out at the appraisal, after the money is spent.

The process

1Pull closed sales only — last 90 days if the market has any volume, 180 at the outside. A sale from last spring is a different market.
2Tighten the geography before you widen it. Same subdivision beats same zip code by a wide margin. Never cross a school-district boundary, a major road or a flood-zone line to find a comp.
3Match the physical type — same style, storey count, bedroom count, and within roughly 20% on square footage. A ranch does not comp a two-storey.
4Match the condition to your finished product, not to the property today. You are pricing what it will be.
5Adjust, then take the middle — and if your adjusted comps do not converge, you do not have an ARV, you have a range that needs to be underwritten as one.

Worked ARV — subject: 3 bed / 2 bath, 1,400 sq ft, renovated to rental-grade finish

Comp A: 1,450 sq ft, renovated, sold $274,000: −$4,000 size → $270,000
Comp B: 1,320 sq ft, renovated, sold $261,000: +$8,000 size → $269,000
Comp C: 1,400 sq ft, partially updated, sold $252,000: +$18,000 condition → $270,000

ARV = $270,000 — three comps converging inside $1,000.

That convergence is the signal. Three independent sales landing within a percent of each other after adjustment is strong evidence; three sales that need $30,000 of adjustment each to agree is not an ARV, it is a hope with arithmetic attached.

The neighbourhood ceiling

The most expensive ARV mistake is not being 5% optimistic — it is assuming a better finish breaks the ceiling. Every street has a price band its buyers will pay within, set by location, schools and lot size rather than by countertops. Put a $30,000 kitchen into a street where nothing has sold above $270,000, and the appraisal comes back at $270,000.

Find the ceiling first, then design the rehab

Before scoping any work, sort every sale on the street by price and look at the top three. That is your ceiling. Your ARV should sit at or below it, and your rehab budget should be designed to reach it — not to exceed it. Finishing to the top of the band is usually right; finishing above it is a donation.

What a miss costs

ARV estimate	70% rule max offer (repairs $45,000)	BRRRR refi at 75% LTV
$290,000 (+7%)	$158,000	$217,500
$270,000 (your estimate)	$144,000	$202,500
$248,400 (−8%)	$128,880	$186,300
$230,000 (−15%)	$116,000	$172,500

An 8% miss removes $15,120 from your maximum offer and $16,200 from your refinance proceeds — on the same deal.

Note that the error hits both sides. If you bought at $144,000 believing in a $270,000 ARV and it appraises at $248,400, you have simultaneously overpaid by $15,120 and lost $16,200 of the capital you were counting on getting back out. That is the mechanism behind most BRRRR deals that quietly become long-term holds.

Cross-checks worth two minutes

Price per square foot. Compute it for every comp. If your ARV implies a figure above the highest comp, you are pricing above the band.
Total adjustment size. If you have adjusted a comp by more than about 15% of its sale price, it was not comparable. Drop it and find another.
Days on market for the comps. Fast sales suggest the band is real; comps that sat for months at that price suggest it is the top of it.
A second opinion. Ask an agent with no stake in the transaction for their number before you share yours. It is the cheapest error-check available.

Underwrite the low end, then check the deal still works

The disciplined habit is to run the deal at your ARV and again 10% below it. If it only works at your estimate, you are not buying a property — you are buying your own opinion of one. The free calculator will show you what the lower ARV does to the refinanced loan, the cash flow and the coverage ratio in a few seconds.

Frequently asked questions

What does ARV mean in real estate?

After-repair value — what a property will be worth once the planned renovation is complete and it is in market-ready condition. It drives both the maximum offer under the 70% rule and the size of the refinance loan in a BRRRR.

How do you calculate ARV?

Take three to five closed sales of similar properties in the same immediate area, sold within the last 90 days, and adjust each one toward your subject for size, bedroom and bathroom count, and finished condition. The middle of the adjusted range is your ARV.

Can I use Zillow's Zestimate for ARV?

Only as a rough sanity check. Automated valuations cannot see interior condition or the finish level you plan, which is precisely the variable an ARV is meant to capture. They are useful for catching a gross error and unreliable for setting a number you will bet capital on.

How accurate does an ARV estimate need to be?

Within about 5% is a realistic target with good comps. Because ARV drives both your offer and your refinance proceeds, an error is effectively paid for twice, so the safer practice is to underwrite at the low end of your range and treat anything above it as upside.