ARV [After Repair Value] is the market value of a property after your renovation plan is completed.
Most ARV mistakes come from using the wrong comps or ignoring differences buyers actually pay for.
The safest method is to match comps to your finished scope, then adjust conservatively for differences.
If ARV is inflated, every downstream number breaks: leverage, rehab budget, and profit margin.
Treat ARV as a range, not a single number, and underwrite to the conservative end of that range.
Use this guide to estimate ARV the way the market will actually price your finished product.
At a glance
- ARV must match the finished scope, not the current condition
- Use comps in the same micro-market and price bracket
- Adjust conservatively for size, layout, lot, condition, parking
- Price ARV as a range, not a point estimate
- Overstated ARV creates financing risk and resale risk
- Anchor to buyer demand and DOM [Days on Market] reality
Start with the finished product, not the current property
Your comps must look like what your property will become. If your renovation creates a modern, open layout with upgraded kitchens and baths, your comps should reflect that finished condition. If your comps are “nicer” than your planned scope, you are borrowing ARV from someone else’s renovations.
Comp selection rules investors use
- Stay close geographically. Micro-markets price differently even within the same city.
- Match property type: SFR [Single-Family Residence] vs condo vs duplex is not interchangeable.
- Match size and layout. Big gaps force huge adjustments, which reduces reliability.
- Use recent sales. Old comps miss market shifts.
- Avoid outliers unless the buyer pool is clearly the same.
Conservative adjustment approach
Adjust only for differences you can defend. The goal is not the highest ARV. The goal is the ARV that still holds if:
- your rehab runs longer than expected
- the market softens slightly
- inspection reveals additional work
- the buyer pool becomes more price-sensitive
A reliable ARV is usually supported by a cluster of comps that land in a tight range, not a single “perfect comp.”
Quick ARV sanity checks
- Does your ARV imply an unrealistic price-per-square-foot jump?
- Are you relying on one comp instead of several consistent comps?
- Would a buyer actually choose your finished property at that price today?
- Does your plan assume fast DOM [Days on Market] regardless of seasonality?
- If you reduced ARV by 5 percent, does the deal still work?
Next step
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Frequently Asked Questions
What is ARV [After Repair Value]?
ARV is the estimated market value of a property after the planned renovations are completed.
How many comps should I use?
Use multiple comps that cluster around a realistic range. One comp is rarely enough to support a reliable ARV.
Should I use active listings for ARV?
Active listings help you understand competition, but closed sales are stronger evidence of what buyers actually paid.
How do I adjust for square footage?
Use conservative adjustments aligned with how your local market prices size differences, and avoid heavy reliance on adjustments when comps are too different.
What is the most common ARV mistake?
Using comps from a different neighborhood or a higher price tier, then assuming buyers will pay the same premium.
How does ARV affect financing?
ARV affects leverage and risk. Inflated ARV can reduce approval odds, tighten terms, or create problems if valuation comes in lower.
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