How to Calculate ARV (After Repair Value): The Complete Guide
How to calculate after repair value from sold comps, adjust for differences, cross-check with price per square foot, and use the 70% rule to set a maximum offer. Worked examples and Texas notes.
ARV, or after repair value, is what a house should sell for once the work is done. Almost every number in a flip or wholesale deal is built on it: your offer, your loan, and your profit. If the ARV is off by $20,000, the whole deal is off by $20,000.
This guide walks through how investors actually calculate it, with worked examples.
Looking at a deal right now? Browse wholesale deals in Texas. Listings show the asking price next to the wholesaler's ARV and repair estimate, so you can check the math before you call.
What ARV is (and isn't)
ARV is the price a property should sell for after the planned repairs, based on what similar renovated homes nearby have recently sold for.
It is not:
- The current, as-is value
- The purchase price plus the cost of repairs
- The asking price of renovated homes that are still on the market
A good ARV comes from closed sales. Everything else is an opinion.
Why ARV matters
ARV drives four decisions:
- Your maximum offer. Most investors work backward from ARV (more on the 70% rule below).
- Your profit. Profit is roughly ARV minus purchase price, repairs, and holding and selling costs.
- Your financing. Hard money lenders often lend a percentage of ARV, so a low appraisal can shrink your loan.
- Whether to pursue the deal at all. A quick ARV check saves you from chasing deals that don't work.
Three ways to estimate ARV
1. Average of comparable sales (most reliable). Find 3 to 6 renovated homes that sold recently near the property, adjust each for differences, and average them.
2. Price per square foot. Divide each comp's sale price by its square footage, average those numbers, and multiply by your property's square footage. This is useful when comps vary in size, but it can mislead in neighborhoods where very small or very large homes sell at different rates.
3. Current value plus renovations (least reliable). Adding the cost of repairs to today's value is a rough starting point at best. A $40,000 kitchen does not automatically add $40,000 of value.
Step by step: calculating ARV from comps
Step 1: Decide what the finished house will be
Before you pull comps, write down what the property will look like after repairs:
- Bedrooms and bathrooms
- Square footage
- Level of finish (builder grade or higher end)
- Features such as a garage, pool, or updated systems
You are comparing the finished house to other finished houses, not to its current condition.
Step 2: Find comparable sales
A good comp is:
- Sold in the last 3 to 6 months. In a fast-moving market, stay closer to 3.
- Close by. Within about half a mile to a mile, and in the same neighborhood or subdivision when possible. Crossing a major road, school boundary, or highway can change values.
- Similar in size. Within roughly 15 to 20 percent of your square footage.
- Similar in layout. The same bed and bath count, or within one.
- In similar condition. Renovated, not sold as-is.
- The same property type. Single family to single family, not to a townhome or condo.
Where to find them: MLS data (through an agent if you don't have access), sold listings on Zillow or Redfin, paid tools like PropStream, and county appraisal district records. Texas is a non-disclosure state, so sale prices are not in public records. That makes MLS data and a local agent more important here than in many other states.
Aim for at least 3 comps. Five or six gives you a better picture.
Step 3: Adjust for differences
No comp is identical to your property, so adjust each comp's price to estimate what it would have sold for if it matched your house.
- If the comp is better than your property (bigger, an extra bathroom, a garage your house lacks), subtract value from the comp.
- If the comp is worse, add value to the comp.
Adjustment amounts depend heavily on the neighborhood and price range. A third bathroom is worth far more in a $400,000 suburb than in a $150,000 one. Local agents and appraisers are the best source for the right numbers in a given area. Ask them, and keep a record of what you learn.
Example: Your property is 3 bed, 2 bath, 1,500 square feet. A comp is 3 bed, 2 bath, 1,600 square feet and sold for $250,000. If homes in that area sell for about $100 per additional square foot, the comp adjusts down by $10,000, to $240,000.
Step 4: Average the adjusted values
| Comp | Adjusted value |
|---|---|
| 1 | $245,000 |
| 2 | $252,000 |
| 3 | $238,000 |
| 4 | $250,000 |
| 5 | $248,000 |
Average: $1,233,000 ÷ 5 = $246,600.
Many investors round down and use something like $240,000 to $245,000. Being a little conservative protects you if the market softens while you're renovating.
The price per square foot method
| Comp | Sale price | Square feet | Price per sq ft |
|---|---|---|---|
| 1 | $250,000 | 1,600 | $156 |
| 2 | $240,000 | 1,550 | $155 |
| 3 | $255,000 | 1,650 | $155 |
Average: about $155 per square foot. For a 1,500 square foot house, that gives 1,500 × $155 = $232,500.
Notice that this comes out lower than the comp-average method. Smaller homes often sell for a bit more per square foot, so this method can undervalue a smaller subject property. Use it as a cross-check, not your only number.
Using ARV to set your maximum offer: the 70% rule
The 70% rule is a quick way for flippers to set a ceiling on what they'll pay:
Maximum allowable offer (MAO) = (ARV × 70%) − repair costs
Example: ARV $250,000, repairs $40,000.
MAO = ($250,000 × 0.70) − $40,000 = $135,000
The other 30% of ARV has to cover:
- Selling costs: agent commissions and the seller's closing costs, often 6 to 8 percent combined
- Buying costs: the buyer's closing costs and loan fees, often 2 to 3 percent
- Holding costs: interest, taxes, insurance, and utilities while you renovate and sell
- A contingency for surprises
- Your profit
In expensive or very competitive markets, some investors go above 70 percent. On riskier properties or in slow markets, they go lower. The rule is a screening tool, not a guarantee. Run the full numbers before you commit.
If you're buying from a wholesaler, remember that the wholesaler's assignment fee is part of your purchase price. The MAO applies to the total you pay.
Common ARV mistakes
Using active listings instead of sold homes. Asking prices are what sellers hope to get. Filter for sold properties only.
Using old sales. A sale from a year ago may not reflect today's market. Stick to the last 3 to 6 months when you can.
Comparing to houses sold as-is. Distressed sales tell you the current value, not the after repair value.
Ignoring the neighborhood line. Two houses a mile apart can be in different school zones or subdivisions with very different values.
Overestimating your finishes. If your rehab budget is builder grade, compare to builder-grade flips, not to the high-end remodel down the street.
Trusting someone else's ARV. A wholesaler's ARV is a starting point, not a fact. Pull your own comps before you make an offer.
When to get professional help
An appraiser makes sense when the property is unusual, comps are scarce, the deal is large, or a lender requires one. Expect to pay several hundred dollars.
A local agent can pull MLS sold data and prepare a comparative market analysis. This is especially useful in Texas, where sale prices aren't public record. Many agents will do this for investors who are likely to list with them or buy through them.
ARV in Texas: a few things to watch
- Sale prices aren't public. As a non-disclosure state, Texas relies heavily on MLS data. Online estimates can be further off than in states with public sale prices.
- Foundations. Expansive clay soils in much of North and Central Texas make foundation issues common. Buyers and appraisers notice, so make sure your comps had sound foundations, or that your repair budget covers yours.
- Flood risk. Around Houston and other flood-prone areas, a property's flood zone and flood history affect what buyers will pay and what insurance costs. Compare to homes with a similar flood risk.
- New construction nearby. New subdivisions can make renovated older homes look expensive or cheap by comparison. Compare resales to resales when you can.
- Property taxes. Texas taxes are high compared with many states, which affects both your holding costs and what end buyers can afford.
A worked example
Property: 3 bed, 2 bath, 1,400 square feet, needs a full cosmetic rehab.
Comps:
- Comp 1: 3/2, 1,450 sq ft, sold $242,000
- Comp 2: 3/2, 1,380 sq ft, sold $235,000
- Comp 3: 4/2, 1,500 sq ft, sold $255,000
- Comp 4: 3/2, 1,420 sq ft, sold $248,000
Adjust: Comp 3 has an extra bedroom and more space. Using a $15,000 adjustment for the area, it comes down to $240,000.
Average: ($242,000 + $235,000 + $240,000 + $248,000) ÷ 4 = $241,250. Rounded down, ARV ≈ $240,000.
Maximum offer: with $35,000 in repairs, ($240,000 × 0.70) − $35,000 = $133,000.
If a wholesaler is asking $145,000 for this contract, the numbers don't work under the 70% rule. You'd either negotiate down or pass.
ARV checklist
- Define the finished house: beds, baths, square feet, level of finish
- Find 3 to 6 renovated comps sold in the last 3 to 6 months
- Keep comps close by and in the same neighborhood
- Adjust each comp for differences
- Average the adjusted values, then cross-check with price per square foot
- Round down to stay conservative
- Apply the 70% rule, subtracting repairs
- Run the full numbers (holding, closing, selling costs) before you commit
The bottom line
ARV is a calculation, not a guess. Use recent sold comps, adjust honestly for differences, and lean conservative. Getting it right is what keeps a good-looking deal from turning into a loss.
On PropPipeline, listings show the asking price, the wholesaler's ARV and repair estimate, and the all-in cost as a percentage of ARV, so you can screen deals quickly. Then pull your own comps on the ones worth a closer look. Browse deals in Dallas–Fort Worth, Houston, or all of Texas. New to buying wholesale? Start with how to buy wholesale real estate in Texas.