how-to
How to Calculate ARV for a Flip: Step-by-Step
Table of Contents
- What ARV Means and Why It Decides Your Flip
- How to Find Real Estate Comps That Hold Up
- Adjusting Comps to Match Your Property
- An ARV Example for a Flip From Comps to Offer
- Using an ARV Calculator for House Flipping
- The 70 Percent Rule in House Flipping
- From ARV to a Maximum Purchase Price
- Frequently Asked Questions
Last Updated: October 21, 2026
What ARV Means and Why It Decides Your Flip
ARV sets your offer, repair budget, and profit. Get it wrong by a few thousand dollars and a strong deal turns into a loss.
ARV is not purchase price plus renovation cost. A $30,000 kitchen remodel does not automatically add $30,000 of value, value comes from what buyers pay for similar finished homes nearby.
Below, we'll show you how to calculate ARV from real sales data, adjust for differences, and turn that estimate into a maximum offer.
How to Find Real Estate Comps That Hold Up
Comps are recently sold homes that closely match your subject in location, size, age, and condition, the foundation of every credible ARV.
Start with these filters:
- Sold, not listed. Only closed sales count. Active listings show what sellers hope to get.
- Recent. Aim for sales within the last three to six months in a stable market.
- Same neighborhood. Stay within a tight radius, and stay on the same side of major roads or school boundaries where prices split.
Pull at least three to five solid comps, fewer than three and one odd sale can throw your estimate off. County deed transfers confirm sale dates and prices; your local MLS remains the most reliable source for closed sale data.
Screening Comps Before You Adjust Them
Not every recent sale belongs in your set. Screen out the ones that will skew your number:
- Foreclosures and short sales, unless your whole neighborhood is distressed
- Family transfers and estate sales below market
- Homes sold to an investor in as-is condition
A common mistake is grabbing the three highest sales on the street. That flatters your ARV and leads to an offer you cannot profit from. Pick comps that genuinely resemble your finished product.
Adjusting Comps to Match Your Property
Adjustments are dollar corrections to a comp's sale price so it matches your subject: subtract if the comp has a feature yours lacks, add if yours is superior.
The most reliable way to set adjustment amounts is the paired-sales method: find two recent sales in the same neighborhood nearly identical except for one feature, say, a two-car garage versus a carport, and the price difference is your market-derived adjustment.
Work through the big-ticket differences first, and apply each adjustment to every comp the same way:
- Square footage. Multiply the difference in square feet by the local marginal price per square foot for added living area, not the overall price per square foot. The marginal rate is usually lower than the average rate, because the first 1,000 square feet carry more value than the next 500. A common pattern is to use 40% to 60% of the neighborhood's average price per square foot for the size adjustment, then sanity-check against paired sales.
- Bathrooms. A full bath typically carries more value than a half bath. Use paired sales where possible; otherwise apply a consistent dollar figure across your comp set and disclose it.
- Garage. A two-car garage outranks a carport or street parking. Adjust in whole-space increments rather than guessing a single blended number.
- Lot size and location. Busy road, backing to commercial property, or a smaller lot all pull value down. Location adjustments are the hardest to quantify, so lean on paired sales within the same block or subdivision and keep the adjustment modest when evidence is thin.
Apply adjustments consistently across every comp, if you add for a finished basement in one, do it in all.
A repeatable adjustment workflow looks like this:
- List each comp's sale price and its key features side by side with your subject property.
- For each feature where the comp differs from your subject, enter a dollar adjustment with a plus or minus sign.
- Sum the adjustments for each comp to get its adjusted value.
- Compare the adjusted values. If they cluster within a tight range, you have a credible ARV. If they spread widely, your adjustments are too aggressive or your comps are not similar enough, go back and re-screen.
- Weight the comps you trust most (closest location, most similar condition, most recent sale) more heavily than the outliers.
Your adjustments should reflect what buyers pay for a feature, not what you spent to install it. That keeps your ARV honest and your offer grounded.
An ARV Example for a Flip From Comps to Offer
Numbers make this concrete. Say you are evaluating a three-bedroom, two-bath house with 1,400 square feet in need of a full cosmetic renovation.
Your three screened comps, all renovated and sold in the past four months:
| Comp | Sale Price | Size | Adjustment | Adjusted Value |
|---|---|---|---|---|
| Comp 1 | $245,000 | 1,450 sq ft | -$5,000 (larger) | $240,000 |
| Comp 2 | $238,000 | 1,350 sq ft | +$5,000 (smaller) | $243,000 |
| Comp 3 | $252,000 | 1,500 sq ft | -$10,000 (larger) | $242,000 |
Average adjusted value: about $241,700. Round to $242,000 as your ARV.
Now subtract the full project cost. Repairs come to $45,000, and you budget holding, closing, and selling costs at $18,000. That is $63,000 in total costs.
Maximum offer: $242,000 - $63,000 - $30,000 = $149,000.
Running the Numbers With a Sensitivity Range
One ARV number feels precise but is not. Run three scenarios:
- Conservative: ARV $232,000, repairs $50,000, costs $20,000
- Base case: ARV $242,000, repairs $45,000, costs $18,000
- Optimistic: ARV $250,000, repairs $42,000, costs $17,000
If your offer only works in the optimistic case, it does not work. Decide from the conservative column to protect margin when a contractor runs late or the market softens.
Using an ARV Calculator for House Flipping
An ARV calculator combines your comp data, adjustments, and repair estimates so you can calculate ARV and an offer price in one step. Most average your adjusted comps, then subtract costs and target profit.
Use a calculator for speed, but feed it honest inputs, the tool is only as good as the comps and repair numbers you enter. Enter conservative repair figures, not your contractor's best-case verbal quote, and update the ARV the moment new comps close nearby.
The 70 Percent Rule in House Flipping
The 70 percent rule is a quick screening guideline: multiply the ARV by 0.70, then subtract repair costs to get your maximum offer.
Using the example above: $242,000 × 0.70 = $169,400. Minus $45,000 in repairs = $124,400 maximum offer.
Notice that is lower than the $149,000 our full cost breakdown produced. The 70 percent rule is deliberately strict. It is a filter, not a final answer.
From ARV to a Maximum Purchase Price
Your maximum purchase price is ARV minus every project cost minus your required profit. The formula is simple; the discipline is in the cost list behind it.
Build the full list every time, with a dollar figure next to each line before you make an offer:
- Purchase price. The number you are solving for.
- Renovation and rehabilitation budget, plus contingency. Add 10% to 15% on top of your contractor's bid. Older homes hide surprises behind walls, and a contingency is not optional padding, it is the line that keeps a flip from turning into a loss.
- Holding costs. Property taxes, insurance, utilities, lawn care, and any HOA dues during the flip. Multiply the monthly carry by your expected months of ownership, then add two months of buffer for delays.
- Financing costs and loan fees. Origination points, underwriting fees, appraisal, and interest. Hard money and private loans often carry higher rates and shorter terms, so model the interest for the full hold period, not just the rehab window.
- Closing costs on the buy. Title, escrow, recording, and lender-required items.
- Selling costs. Real estate commissions, transfer fees, title, and any seller concessions. In many markets, total selling costs land in the 6% to 9% range of the sale price, confirm with a local agent rather than assuming.
- Target profit. Set this as a dollar figure or a percentage of ARV, and hold yourself to it. A common pattern is to target 10% to 15% of ARV as profit, but your number should reflect your risk tolerance and the deal's complexity.
Using the worked example: ARV is $242,000, repairs $45,000, and holding, closing, and selling costs $18,000. Add a 12% contingency on repairs, about $5,400, bringing total project costs to roughly $68,400. With a $30,000 profit target:
Maximum offer = $242,000 − $68,400 − $30,000 = $143,600.
That is lower than the $149,000 the quick math produced because the contingency is now included, the full model is stricter than the shortcut, and it is the number you should actually offer from.
Stress-Testing the Offer Before You Commit
One ARV number and one cost estimate feel precise. They are not. Run three scenarios and see whether the deal survives the conservative one:
- Conservative: ARV $232,000, repairs $50,000 plus 12% contingency, costs $20,000, profit target $30,000 → maximum offer about $126,000.
- Base case: ARV $242,000, repairs $45,000 plus 12% contingency, costs $18,000, profit target $30,000 → maximum offer about $143,600.
- Optimistic: ARV $250,000, repairs $42,000 plus 12% contingency, costs $17,000, profit target $30,000 → maximum offer about $155,000.
If your offer only works in the optimistic case, it does not work.
Sensitivity matters most on three levers: sale price, repair cost, and time to sell.
Local market timing belongs in this math too: a flip that takes eight months carries more holding cost and price risk than one that sells in three.
When assumptions get thin, get a professional appraisal or broker price opinion, cheap insurance on a six-figure decision.
Frequently Asked Questions
What does ARV mean in house flipping?
ARV stands for after-repair value: the price a renovated property would sell for in its current market, based on what similar updated homes have actually sold for. It is not the purchase price plus your renovation costs, and it is not what you hope the house is worth. ARV reflects the resale value buyers would pay once the work is finished, which is why it anchors every offer you make on a fix-and-flip.
How do you find comparable sales to estimate ARV?
Pull recent sold properties from the multiple listing service within roughly a half-mile to one mile of your subject property, sold in the last three to six months. Filter for similar square footage, bedroom and bathroom count, lot size, and property condition. Aim for three to five strong comps, ideally at least one fully renovated home that matches what yours will look like after the rehab. Avoid active listings and distressed sales unless you adjust for them.
Does ARV include renovation costs?
No. ARV is the post-renovation resale value only. Renovation costs, holding costs, closing costs, and financing costs are separate line items that come out of your project economics when you set a maximum offer. Mixing repair costs into the ARV number is one of the most common mistakes investors make, because it inflates the value and hides a thin profit margin. Keep the two calculations separate.
How do you use ARV to determine your maximum offer?
Start with ARV, then subtract your full project costs: renovation budget with a contingency, holding costs, closing costs on both ends, financing costs, and your target profit. What remains is your maximum allowable offer. Many investors also apply the 70 percent rule as a quick sanity check: multiply ARV by 0.70 and subtract repair costs. If your calculated offer comes in above that number, tighten the budget or walk away.
A flip only works when the ARV is built on real comps and the offer leaves room for every cost. If you are evaluating a property in the Phillipsburg or Lehigh Valley area, Gina Poslusny with Weichert Realtors helps investors buy and sell flips with numbers they can defend. We bring local comp knowledge, help you pressure-test your repair assumptions, and connect you with buyers for finished properties. Reach out to review your next deal before you make an offer.
