ARV (After Repair Value)

ARV is the single most important number in a flip, because every other figure keys off it. Your maximum offer, your target profit and your 70% rule ceiling are all derived from what the property will sell for once the work is done. Get the ARV right and a marginal deal reveals itself early; get it wrong and an optimistic exit price hides a loss until it is too late to undo.

ARV is not the same as the current value of the property in its as-is state, and it is not the bank's valuation. It is your estimate of the finished sale price, built from comparable sales of similar, already-renovated homes nearby. The method is straightforward in principle: find recent sales that match the property you will have after the reno — same suburb, similar land, similar bed/bath count, a comparable finish — and work back to a defensible figure, adjusting up or down for the differences.

Where ARV estimates go wrong

The most common mistake is comparing to the wrong condition. If you price your finished flip against tired, unrenovated stock, you will understate the ARV; if you lean on the two highest sales on the street and ignore the rest, you will overstate it. Thin comparable data, a fast-moving market, and unusual features (a large or awkward block, a heritage listing) all widen the error bars. Treat a single number as a range, and stress-test the deal against the bottom of that range, not the top.

ARV also differs from a bank valuation, which is deliberately conservative and often lands below an accurate market ARV. Financing to the bank's figure while selling to the market's is a normal part of the plan, not a contradiction. Run your comps carefully, keep the evidence, and use the ARV calculator to turn them into a working number you can feed straight into a full deal analysis.