After-repair value (ARV) is what the house should sell for once the work is done. Your maximum offer, your rehab budget and your profit all start from it, so an ARV that is 10% too high can turn a good-looking flip into a loss. The good news: ARV is not a guess. It comes from homes that actually sold.
Step 1: Use Closed Sales, Not Listings
Asking prices tell you what sellers hope for. Closed sales tell you what buyers paid. Use sales from the last 6 to 12 months; in a market that is moving, lean on the most recent ones.
Step 2: Match the House
- Same kind of property: single-family with single-family, condos with condos, a duplex with other duplexes.
- Similar size: within about 25% of the square footage.
- Similar bedrooms: within one bedroom.
- Close by: within about a mile in the city, wider only when there aren't enough sales. Crossing a major road, school district line or neighborhood boundary can change values more than distance does.
- Similar lot when it matters: an acre lot isn't comparable to a city lot.
Step 3: Look at the Top of the Range
A renovated flip competes with the best-finished homes in the area, not the average one. Sort your comps by price per square foot and look at the upper quarter — the updated kitchens, new baths and fresh systems. That price per square foot times your house's square footage is a reasonable ARV.
Take at least 5 matching sales. Use the price per square foot at the top quarter of them (the 75th percentile), but never more than about 1.3x their median — a single luxury outlier shouldn't set your value. Multiply by the subject's square footage.
Step 4: Leave Out Sales That Don't Represent a Finished Flip
- Foreclosures, short sales and auctions: distressed prices, not finished-home prices.
- Unusual sales: family transfers, homes with major defects, sales with big seller concessions.
- New construction: buyers pay a premium a renovated older home won't get.
If your ARV is more than about 1.75 times the purchase price, double-check it. Usually the comps are better houses, on better streets, or bigger than they look. Drive the comps, read their listing photos, and ask an agent who closes in that neighborhood.
Step 5: Sanity-Check With an Agent
Before you commit, have a local agent pull the comps independently and tell you what a buyer would pay for your finished house — including what finishes buyers in that price range expect. Two independent ARVs that land close together are the best protection you have.