How to Estimate After Repair Value (ARV): The Investor's Formula
You're looking at a distressed property. The seller wants an offer today. Before you can name a number, you need to know what the house will be worth once it's fixed. That finished price is the after repair value, and every wholesale offer, every flip budget, and every cash-buyer number traces back to this one estimate.
Get it wrong and the deal math collapses.
This guide walks through the method investors actually use: comp selection, condition adjustment, and the offer formula that follows.
The comp-based method
ARV is the expected retail sale price of the finished property, derived from recently sold homes that a buyer would compare it to. Appraisers call these comparables. Investors just call them comps.
A good comp set has three to five properties that are:
- Within roughly a half-mile in the same neighborhood (closer is better)
- Sold within the last 90 to 180 days
- Within about 20% of the subject's square footage
- Similar bed/bath count and construction era
- Renovated to the condition you plan to reach, not the condition it's in now
The most common mistake is comping against as-is or distressed sales. That produces an "as-is value," not an ARV.
Adjust for differences
No two houses are identical. For each comp, adjust its sale price for the ways it differs from your subject at finished condition: square footage, garage, pool, lot, finish level. A comp with a pool that your subject lacks isn't worth what it sold for. It's worth that minus the pool's contributory value in that neighborhood.
Keep adjustments defensible. If you can't explain why a $12,000 adjustment is the right number, it isn't.
Price the rehab honestly
ARV is only half the equation. Walk the property or get photos. Price the big-ticket items first: roof, HVAC, foundation, kitchen, baths. Add a contingency, because every rehab finds something the walkthrough missed.
The 70% offer formula
The standard investor screen:
Maximum offer ≈ ARV × 0.70 − repair costs
The 0.70 bakes in closing costs, carrying costs, and profit margin. In hot markets some investors push to 75%; in slower ones they pull back. The point of the rule is discipline: it stops you from paying retail for a house that still needs $40,000 of work.
Suppose the finished comps support an ARV of $300,000 and the rehab scope prices at $45,000:
- ARV: $300,000
- 70% of ARV: $210,000
- Minus repairs: $210,000 − $45,000 = $165,000 max offer
If the seller needs $200,000, the deal doesn't work at those numbers. The correct answer is to say so, not to talk yourself into a thinner margin.
How wholesalers calculate ARV
Wholesalers run the same comp method but work faster. They pull MLS data or public records, identify three tight comps, make quick adjustments (often price-per-square-foot spreads), and plug the result into the 70% formula. Speed matters because the contract window is short.
Many use spreadsheet templates or mobile apps that automate the adjustment math. The risk is over-reliance on automated valuation models that haven't seen the property's actual condition. A $15,000 foundation crack can erase a wholesaler's assignment fee if the end buyer's inspector catches what the AVM missed.
Seasoned wholesalers verify their ARV with a local agent's broker price opinion or a recent appraisal if the seller has one. They also track their own closed comps to calibrate the formula for each micro-market.
Common mistakes
Comping against distressed sales. Those prices reflect the current condition, not the finished one.
Using active listings. Asking prices are opinions; closed sales are evidence.
Ignoring days on market. If finished comps sat for 90 days, your ARV assumes a longer hold than your carrying-cost math does.
Stretching the ARV to make the deal work. The formula exists to protect you from exactly this.
When you don't need to do this math
If you'd rather sell than renovate, Flowstate buys houses as-is for cash, no repairs, no comping exercise, closing in 21 days or less. For investors looking at deal flow, see how we evaluate wholesale deals and our market coverage.
Frequently Asked Questions
What is a good ARV in real estate?
A "good" ARV is one that leaves room for the 70% rule after repair costs. If local comps support $250,000 and repairs run $30,000, your max offer is around $145,000. Whether that's "good" depends on what the seller will accept and what your capital costs.
Can I use Zillow for ARV?
Zillow's Zestimate reflects current condition, not finished condition, and carries a median error rate that varies by market. Use it as a starting point, then verify with closed MLS comps that match your planned finish level.
How accurate does my ARV need to be?
A 5% error on a $300,000 ARV is $15,000. That can be the difference between profit and loss. Tighten your comp selection and adjustments until you can defend every number to a skeptical lender or partner.
What if I can't find three good comps?
Expand your radius slightly, extend the date range to six months, or accept a wider square-footage band. If the neighborhood is too unique or too thin, consider whether the deal carries more risk than your model can price.