What Does ARV Mean in Real Estate?

How to estimate ARV

1. Identify 3–6 recently sold comparable properties — same area, similar size, similar finished quality.
2. Adjust for differences (extra bedroom, premium location, larger lot).
3. Apply a small market-trend adjustment if comps are months old.
4. The resulting range is your ARV estimate.

The 70% rule (and its limits)

A common flipper rule of thumb: maximum offer = (ARV × 70%) − estimated repair costs. The 30% buffer covers carrying costs, transaction costs, and profit. The rule works in some markets and breaks in low-margin or high-cost markets like the GTA, where 75–80% with tight repair estimates is more realistic.

Why ARV estimates fail

• Comp selection bias — cherry-picking optimistic comps.
• Underestimating repair scope and costs.
• Market shifts during the rehab period.
• Finish quality not actually matching comps.

Where ARV matters most

ARV drives flip economics, BRRRR refinance amounts, and hard-money lender LTV calculations. For pure investors, get a designated appraiser’s opinion on ARV before committing serious capital — not just an agent’s CMA.

Frequently Asked Questions

Do appraisers use ARV?

Yes — appraisers prepare “subject to repairs” appraisals that establish ARV for lender purposes.

Is the 70% rule reliable in the GTA?

Often not. Tight margins and high carrying costs make 70% conservative; experienced GTA flippers underwrite at 75–80% with tighter contingencies.

How accurate are online ARV estimates?

Less accurate than current-condition AVMs. ARV requires judgment about finishes — something automated tools struggle with.