What is ARV?

ARV stands for after repair value: the price a property is expected to sell for after a planned renovation is finished. It answers a question about the future — what will this house be worth once the work is done — rather than a question about the present.

The term comes from the fix-and-flip trade, where the entire economics of a project hang on that finished number. A flipper buys a property in poor condition, pays for the renovation, carries the property while the work happens, and then sells the finished product. Every one of those costs is subtracted from the same starting figure: the ARV. If the ARV estimate is wrong, every number downstream of it is wrong by at least as much.

It is important to be precise about what ARV is not. It is not a measurement, an appraisal on file, or a figure any public office publishes. It is an opinion about a hypothetical future sale, formed by a specific person, from specific evidence, on a specific date. Two competent estimators can look at the same house and produce different ARVs, and both can defend their work.

The standard method is comparable sales, usually just called comps. The estimator looks for properties that recently sold near the subject property and resemble what the subject will be after the renovation: similar size, similar age, similar bedroom and bathroom count, and — critically — already renovated to the same standard the project plans to reach. A sale from last month, two streets over, of a renovated house the same size is strong evidence. A sale from two years ago, or from a different school district, or of a house still in original condition, is weak evidence.

Because no two houses match exactly, estimators adjust. If the closest comp has a garage and the subject does not, some amount comes off; if the subject has an extra bathroom, some amount goes on.

The estimate is inseparable from the renovation scope it assumes. An ARV computed against fully renovated comps is only meaningful if the budget actually reaches that standard of finish. A common failure is mixing the two: pricing the finished product against top-condition comps while budgeting a cosmetic refresh.

Lenders who finance renovation projects usually commission their own opinion rather than accept the borrower's. An appraiser can be engaged to value the property subject to a stated scope of work — an appraisal of the house as it will be, contingent on the described renovation actually happening. That number frequently differs from the investor's own estimate, and the loan is sized from the appraiser's figure, not the borrower's.

ARV is the anchor investors work backwards from. Instead of asking what a property is worth today, a renovator starts at the expected finished price and subtracts everything between here and there: the repair budget, the costs of buying and selling, the cost of holding the property during the work, and the compensation the investor requires for doing it at all. Whatever remains is the most that investor can pay for the property as it sits.

A widely known shorthand for that arithmetic is the 70% rule: multiply the ARV by 70 percent, subtract the estimated repair cost, and treat the result as a ceiling on the purchase price. The 30 percent that the rule holds back is meant to absorb transaction costs, holding costs, surprises and the investor's compensation, all in one blunt allowance. It is a screening heuristic, not a law of nature — investors adjust the multiplier to their own costs and their own appetite, and many replace it with a full line-item budget once a deal passes the first screen.

In wholesaling, ARV appears in marketing. A wholesaler offering a contract to end buyers will often state an ARV alongside the asking price and the estimated repairs, because those three numbers are how a renovator screens a deal. Experienced end buyers treat a stated ARV as the seller's opinion, not as a fact: they pull their own comps and run their own numbers before offering.

Lenders use ARV to size loans. A renovation lender might lend up to some fraction of the ARV rather than of the purchase price, which is what makes heavier projects financeable: the loan is measured against what the property will become, not what it is.

The numbers below are invented round figures for illustration — they describe no real property, no real market and no listing on this site.

An investor is evaluating a dated three-bedroom house. Three renovated houses of similar size on nearby streets sold in recent months for $290,000, $300,000 and $308,000. After adjusting for a smaller lot on one and an extra bathroom on another, the investor settles on an ARV of $300,000, assuming a renovation to the same standard of finish those comps had.

A contractor walks the property and prices that scope of work at $60,000. Applying the 70% rule as a first screen: $300,000 × 0.70 = $210,000, minus $60,000 of repairs, gives a ceiling of $150,000 on the purchase price. If the owner will sell at or below that number, the deal advances to a full budget; if the owner needs $190,000, this buyer passes.

Notice how the estimate carries all the risk. If the true finished price is $270,000 rather than $300,000 — a miss of one-tenth — the $30,000 of error comes straight out of the room the investor left for costs and compensation. That is why the quality of the comps matters more than the arithmetic, and why buyers re-derive ARVs they are handed rather than adopting them.

As-is value is the price the property would bring today, in its current condition, with no work done. The gap between as-is value and ARV is what the renovation is expected to create, and the repair budget is what it costs to create it. The two numbers answer different questions and are estimated from different comps — as-is against unrenovated sales, ARV against renovated ones.

An appraised value is an opinion too, but one produced by an appraiser under professional standards, usually for a lender's benefit. An appraisal can be of the property as it stands or subject to a described renovation; only the second kind is comparable to an ARV.

The figure a county property appraiser or tax assessor publishes is none of these things. It exists to allocate property taxes, it is produced by mass appraisal across thousands of properties at once, it often lags the market by design, and in many places it is capped in how fast it can move. It is not a prediction of any sale price, before or after renovation, and treating it as one is a category error.

Everything on this page describes how the term is used in the industry; no figure here is a valuation of any property. The useful questions to ask about any ARV are whose it is, from what comps, and as of when.