ARV is estimated by pulling comparable sales (comps) — recently sold properties similar in size, style, age, and condition to your subject property after renovation. Adjust for differences: square footage, bed/bath count, garage, lot size, condition. The weighted average of your best comps is your ARV.
Same property type (colonial to colonial, ranch to ranch). Within 0.5 miles in urban/suburban areas, 1 mile in rural. Sold within 90 days. Similar square footage (within 15%). Same school district. Post-renovation condition — use comps that sold as fully updated, not distressed.
Using comps that are too far away. Using comps that sold too long ago in a moving market. Comparing a ranch to a two-story colonial. Ignoring school district lines. Assuming your renovation will match the highest comps when it won't.
ARV is not the seller's asking price, the tax assessed value, or what Zillow shows. It's what comparable renovated properties have actually sold for. Only closed sales count.
Dan White is a licensed Virginia real estate agent at Pearson Smith Realty and founder of FreeDealCalc.com. He has been calculating ARVs across Northern Virginia and the Shenandoah Valley for 20+ years.