How do I calculate ARV (after repair value)?

ARV, or after repair value, is what a property will be worth after it has been fully renovated. Every number in a wholesale or flip deal hangs off it: the rehab budget gets subtracted from it, the end buyer's profit comes out of it, and your assignment fee lives in whatever margin is left. Get the ARV wrong by 10 percent and there is usually no deal left.

Agents and appraisers estimate value for a living, but as a wholesaler you need to do this yourself, quickly, on every lead. Here is a repeatable process.

Step 1: Pull the right comps

Comparable sales, not active listings, determine ARV. Active listings tell you what sellers hope to get. Sold prices tell you what buyers actually paid. Pull three to six sales that match your subject on four dimensions: distance (within roughly half a mile, and inside the same neighborhood or school boundary), recency (sold within the last three to six months), size (within about 20 percent of your subject's square footage, same bedroom count if possible), and condition (fully renovated, because ARV assumes your property will be too).

That last filter is the one beginners miss. If you comp a to-be-renovated house against other dated houses, you are calculating current value, not after repair value. Look at the listing photos: new kitchen, new flooring, updated baths. Those are your comps.

Step 2: Work in price per square foot

Divide each comp's sold price by its square footage. Example: three renovated comps sold at $150, $154, and $158 per square foot. That clusters tightly, which is a good sign. Average them to roughly $154 per square foot, multiply by your subject's 1,200 square feet, and you get $184,800.

Round down, not up. Calling this ARV $180,000 to $185,000 costs you a little margin on paper and protects the whole deal in practice. If the comps do not cluster, say $140, $155, and $175 per square foot, do not average them. Figure out why they diverge: different street, different finish level, different lot, and comp against the ones that truly match your subject.

Step 3: Adjust for real differences

No comp matches perfectly. Adjust for meaningful differences: a garage the comp has and your subject lacks, a second bathroom, a finished basement, a busy road. Keep adjustments simple and directional. If your subject has one fewer bathroom than every comp, shade the ARV down; do not pretend to appraiser-level precision.

And cap how far you will stretch. If you find yourself making four or five adjustments to force a comp to fit, it is not a comp.

The ARV mistakes that kill deals

The most common ARV errors are predictable: using active or pending listings instead of solds, comping renovated value against unrenovated sales, crossing a neighborhood or school boundary that buyers care about, leaning on an automated estimate for a house in poor condition, and using comps from twelve months ago in a market that has moved.

Automated estimates like a Zestimate are trained mostly on average-condition homes. For a distressed property they tend to overstate current value and say nothing about renovated value, which is the number you actually need.

Pressure-test the number

Before you write an offer, sanity-check the ARV with someone who transacts on it. Would a flipper agree with your comps? Ask one. Your cash buyers see more sold renovated inventory in their farm area than any spreadsheet does, and a two-minute text can save a blown deal. If an agent runs comps for you, ask specifically for sold, renovated comps.

From ARV to your offer

Once you trust the ARV, the offer math is mechanical. Most wholesalers apply the 70 percent rule: multiply ARV by 0.70, subtract the rehab estimate, then subtract your assignment fee to get your max allowable offer. You can run that math in Realastat's free wholesale calculator, which grades the spread as Strong, Viable, Thin, or No Deal, with no signup required.

Whatever tool you use, the discipline is the same: the ARV comes from sold renovated comps, the offer comes from the formula, and you walk away from anything above your number.