After repair value (ARV)

After repair value (ARV) is what a property should be worth once the planned renovation is finished. You estimate it from recent sales of comparable homes that are already renovated, in the same neighborhood, adjusted for the ways they differ from the house you will end up with. Flippers use it to set their offer, BRRRR investors to predict the refinance, and hard money and fix-and-flip lenders to cap the loan.

It values a house that does not exist yet, so it is only as good as the sales behind it and the scope of work it assumes.

What is ARV, and who uses it?

ARV is a market value for the house after the work in your scope is done, not the house as it stands. Three groups lean on it:

• Flippers treat it as the expected sale price, and work the offer, the budget and the profit backward from it.
• BRRRR investors treat it as the expected appraisal at the refinance. A cash-out refinance commonly lends 70% to 75% of the appraised value, so the ARV decides how much of your money comes back; see the BRRRR method.
• Hard money and fix-and-flip lenders use it to cap the loan, alongside a limit on your total cost; see hard money loans.

Keep three values apart: the purchase price is what you pay, the as-is value is what the house is worth today, and the ARV is what it should be worth after the work. A good rehab deal has a wide gap between the first two and the third.

How do you calculate ARV from comparable sales?

It is the appraiser's method, done with more caution.

1. Define the finished house. Write down what it will be after your scope of work: bedrooms, bathrooms, square footage, garage, and the finish level of the kitchen and baths. Adding a bathroom or finishing a basement changes which sales are comparable.
2. Find closed sales of renovated homes, not listings, from the same neighborhood, ideally from the last three to six months. Fannie Mae's appraisal rules require at least three closed comparable sales, say sales from the last 12 months should be used, and call sales within the neighborhood the best indicator of value. Match size, age, style, lot and layout, and check the interior photos: a sale with a dated kitchen is not a renovated comp.
3. Adjust each sale to your finished house. When a comp has something yours will not (a garage, a pool, an extra bath), subtract its market value; when yours will have something the comp lacks, add it. Adjust for time if prices have moved. Fannie Mae requires adjustments to reflect how the market actually reacts, and accepts home price indices as support for a time adjustment.
4. Reconcile. Give the most weight to the sales that needed the fewest and smallest adjustments. Settle on one figure and note the range.
5. Check it with price per square foot. Divide each comp's price by its living area, average the results and multiply by your square footage. If the answer is far from your adjusted figure, find out why before you trust either one.
6. Check it with the market. Listings and pending sales show which way prices are moving, and a local agent who sells renovated homes knows what buyers there pay for.

Why price per square foot is only a check

Larger homes often sell for less per square foot, because the land, kitchen and baths do not grow with the extra room, and a bathroom, a garage or a better lot changes value without changing the size. An investor in the BiggerPockets forums warns against computing ARV from price per square foot alone and suggests using it only as a reference for comps with the same bedrooms and bathrooms.

Fannie Mae makes the same point about adjustments: a rule-of-thumb figure such as $20 a square foot for extra living area is wrong if the market supports $100. The rate for size comes from the market, not from an average.

How an appraiser values a house that is not finished yet

When a lender needs a value for work not yet done, the appraiser values the property subject to completion, as if the described work were finished, from the scope, plans and budget you hand over. A vague scope gets a cautious number.

The Appraisal Institute's guide notes explain that a current value as if proposed improvements were complete is a hypothetical condition, contrary to what exists on the effective date, and must be clearly disclosed; a value as of a future completion date is a prospective value that rests on an extraordinary assumption. Calling a hypothetical-condition value as-is would be misleading, the notes add.

The agency renovation loan shows it in practice. For a Fannie Mae HomeStyle Renovation loan, the appraisal must give an "as completed" value that estimates the property's value after the renovation, using the plans and specifications. On a purchase, the loan-to-value is measured against the lesser of the "as completed" value and the purchase price plus renovation costs: the agency version of the loan-to-cost and loan-to-ARV limits below.

When the work is done, the lender has it verified. Fannie Mae's guide says an appraisal must be made subject to completion when unfinished items affect safety, soundness or structural integrity, and that completion must be documented with visual evidence. The appraiser's completion report has long been Form 1004D. The redesigned appraisal forms (UAD 3.6) are mandatory for new appraisal reports submitted to the agencies from November 2, 2026, and Freddie Mac's FAQ lists Form 1004D among the forms being retired, with the update and the completion report becoming two separate reports.

Two things follow. A rehab lender usually gets its own valuation of the ARV, and its figure, not yours, sets the loan. And at a BRRRR refinance, a different appraiser values the finished house as it stands, from that month's sales: your ARV is a forecast of that appraisal, not a claim on it. Rental property appraisals explains what that appraiser checks.

What is the 70% rule?

The 70% rule is a flipper's offer ceiling:

Maximum offer = 70% of ARV minus the cost of repairs

The other 30% of the ARV pays for closing costs, the loan's interest and points, the holding costs, the costs of selling, and your profit. A lender posting on BiggerPockets puts the profit a good flip should leave at roughly 12% to 15% of ARV.

It is a screen, and it breaks in predictable places:

• Expensive houses. Some costs do not rise in step with price, so on BiggerPockets a lender calls 75% workable on higher ARVs, and investors in high-priced markets report paying more.
• Cheap houses. A small budget overrun eats a thin dollar margin, so the same thread suggests a deeper discount, such as 65%, on low-priced homes.
• It ignores time and financing. A six-month flip on a hard money loan costs more than a three-month flip paid in cash.
• It multiplies your errors. A rule applied to an ARV that is $25,000 too high gives an offer $17,500 too high.

For a rental you plan to keep, the better test is the refinance: will a cash-out loan at 70% to 75% of a conservative ARV pay back what you spent? The 1% rule and its cousins sets the 70% rule beside the others.

Loan-to-ARV and loan-to-cost

Rehab lenders size the loan with two limits, and the lower one wins.

Loan-to-cost is often built as a share of the purchase price plus most or all of the renovation, held back and paid in draws as the work is done. First projects usually get the bottom of these ranges. Investors on forums report that 100% financing exists but is rare for a first project, and usually comes with experience requirements, cash for closing and carrying costs, and the same ARV cap.

The ARV cap is the lender's cushion. Inflating your ARV does not help: the lender values the house itself, and when the cost limit is lower, a higher ARV changes nothing.

GoDoor's value calculator gives a quick first estimate of a house's value and ARV from public records: a starting point for your own comps, not a replacement.

Mistakes that inflate ARV

• Using the best sale on the street. One record sale, often with finishes your budget will not match, is not the market.
• Mixing in listings. An asking price is a hope; use closed sales for the value and listings only for direction.
• Crossing a boundary. A sale across a major road or a school boundary can belong to a different market, even a few blocks away.
• Valuing a different house. If your scope does not add the bedroom, do not use four-bedroom comps.
• Over-improving. Finishes beyond the neighborhood's best sales rarely earn their cost back; buyers there set the ceiling.
• Forgetting that the market moves. Your comps are from the past; the sale is months away. The Federal Housing Finance Agency's purchase-only house price index fell about 6% nationally from May to November 2008, and about 21% from its 2007 peak to its 2011 low. One neighborhood can move faster. Price the deal at a lower ARV too.

General education, not financial, tax or legal advice. Figures are examples: rates, rules and programs change, and every lender sets its own. Last checked November 4, 2026. How we research these guides.