How ARV is calculated
ARV = median(adjusted price per square foot of the comps) × the subject's square footage
No two houses are the same, so each comp's sale price is first adjusted to look like your house. A comp with more than yours sold for more because of it, so the difference comes off its price; a comp with less gets the difference added back. The calculator uses these adjustments:
- $12,500 per bedroom
- $10,000 per full bath
- $5,000 per half bath
- $12,500 per garage space
Each adjusted price is divided by that comp's square footage. Taking the median of those numbers, rather than the average, keeps one odd sale from pulling the whole ARV up or down.
Example
Example only: round, made-up numbers to show the math, not a real house or a real market. The house is 1,500 sqft with 3 beds, 2 full baths and a 1-car garage after the rehab. Three comps sold nearby:
| Comp | Sold for | Adjustment | Adjusted price | Adjusted $/sqft |
|---|---|---|---|---|
| A · 1,500 sqft | $240,000 | Same beds, baths and garage: no adjustment | $240,000 | $160.00 |
| B · 1,600 sqft | $260,000 | 1 more bedroom: minus $12,500 | $247,500 | $154.69 |
| C · 1,400 sqft | $225,000 | 1 fewer full bath, 1 more half bath: plus $5,000 | $230,000 | $164.29 |
The median of $160.00, $154.69, $164.29 is $160.00 per square foot. Times 1,500 sqft, the example ARV is $240,000. After selling costs (7%), the net ARV is $223,200. The tool above is prefilled with this example, so you can change any number and watch the ARV move.
ARV vs net ARV
The ARV is the gross sale price. Selling the house costs money too: agent commissions, closing costs and concessions. The calculator also shows a net ARV after selling costs, the ARV times 93%, so you can see roughly what the sale puts in your pocket before the rehab, holding and financing costs.
ARV and the 70% rule
ARV is the first input to almost every flip and wholesale number. The 70% rule says your maximum allowable offer is ARV × 70% − repair costs. In the example, with $40,000 of repairs: $240,000 × 0.70 − $40,000 = $128,000.
Because the ARV is multiplied, a mistake in it grows: every dollar the ARV is too high adds 70 cents to what you would pay. Take the ARV from this calculator to the MAO calculator to set your percentage and profit target, price the work with the rehab estimator, and check the full costs on the house flip calculator.
Choosing good comps
- Sold, not listed. Use closed sales. Asking prices are what sellers hope for.
- Recent and close. The last few months and the same neighborhood. Cross a busy road or a school boundary and prices can change.
- Similar size. Price per square foot drops as houses get bigger, so stay close to your square footage.
- Fixed-up condition. Compare against houses in the condition yours will be in after the work, not as it is today.
- Watch the odd sale. A family sale, a foreclosure or a house with a view can sit far from the rest. The median helps, but leave out a sale you know is not comparable.