ARV (After Repair Value)
ARV, or After Repair Value, is what a property would be worth on the open market once needed repairs and updates are complete — the number investors work backward from to build a purchase offer.
Appraisers and investors estimate ARV by pulling comparable sales of similarly sized, similarly located homes that are already renovated, then adjusting for lot size, layout, and finish quality. It's a forward-looking estimate, distinct from the property's current as-is value, which reflects its condition today.
In Northern California's foothill and valley markets, ARV comps can vary sharply over a short distance — a freshly flipped tract home in Roseville comps very differently than a similar-vintage house on well and septic in rural Nevada County. Pulling comps too broadly is one of the most common ARV mistakes.
Sellers of a house needing major repairs often anchor their price expectations to an online estimate that assumes the home is already renovated. In practice, an investor's offer is typically built from ARV minus repair costs minus the investor's margin and holding costs — which is why a cash offer on an as-is property looks lower than a post-renovation Zillow estimate, even though it skips repair costs, staging, and months of carrying the property.
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