There are many reasons why one would want to know what their home’s after repair value is. You may be getting ready to sell your house or refinance. Or maybe you are looking to break into real estate investing and need to be able to figure out what a home’s potential is for a fix and flip. Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free After reading this article, you will have a solid understanding of how to evaluate ARV on a home. What Is After Repair Value? After repair value (ARV) is the potential sales price, as determined by the market, of a home. The word “repair” is used very loosely in after repair value. ARV is not determined solely by repairing any defects in the home. Also included in ARV are things like updating floors, replacing counters, painting, and remodeling bathrooms. Imagine that you live next to a house where the owner’s just totally renovated their house with granite counters, brand new flooring, and updated bathrooms. If you had a very similar home to theirs before they updated, their home is now worth more than yours due to their updates. If they were to sell their home, it wouldn’t be reasonable for you to think that your home would sell for the same price without you doing those same updates first. Related: 3 Ways to Find Comps When Determining ARV for Your Wholesaling Deal Comparative Market Analysis A comparative market analysis, also referred to as CMA, essentially means pulling comps. There are many ways that you can pull comps, such as Zillow or Trulia. The most important thing to keep in mind is using a reputable source to pull your information. You are going to be doing a search for houses in your area (as close to your house as possible) that have sold within the last six months. The more recent, the better. When determining ARV, you want to find homes that have sold that are as similar to yours as possible—but have been updated. It is best to find at least three, and make note of the number of beds and baths, square footage, and lot size. This is a good starting points for analysis. Price Per Square Foot It is a good idea when evaluating ARV to use price per square foot as a model. You have to have done your CMA first for this portion to be useful, so if you haven’t yet, go pull some comps! To calculate the price per square foot of comps, you just have to take the price the home sold for and divide it by the square footage of the home. For example, if a home sold for $100,000 and was 1,000 square feet, that home’s price per square foot would be $100. Price per square foot is very relative to the area in question—both by city and sometimes even by neighborhood. That is why we try to pull comps as close to the home in question as possible. How Do You Calculate After Repair Value? Now that we have some comparable sold home prices in price per square foot, we can figure out our home’s price. We take our average price per square foot and multiply it by the square footage of our home. Using the price per square foot from the example above, if our home was 1,200 square feet, our calculated after repair value would be $120,000. Related: 7 Ways to Create BRs, BAs, & Value-Add Amenities for Your Rental [With Before/After Pics!] What Can Affect the Value? Most of the value in your home is determined by the number of beds and baths, square footage, and lot size. But there are other things that go into a home’s value, too. If your home has a garage and none of the comparable homes did, then you could bet that your home is going to be worth more in the same condition. Sheds, carports, tornado shelters (given location necessity), or other amenities can also add value to your home and should be considered when looking at comparative homes. What Will NOT Affect the Value? There are a few main factors that affect a home’s after repair value, as stated above. There are many, many more things that won’t have an affect on price but can affect how quickly you sell the home. For example, taking down a wall between two living spaces to create a more open concept will not add a whole lot of value to the house, but it will create a much more appealing home to the market and cause it to sell faster. Paint color can dramatically affect how desirable a home is to potential buyers, but it won’t make much of a difference to the price you can sell the home for. Why You Should Get a Second Opinion (and Third, Fourth, Fifth, So On…) Once you have come up with an estimated value of your home on your own, it is a good time to cross check that amount with other people who do this more often. They can verify or clarify your findings. People who would be good to reach out to would be top-performing real estate agents in your area, local property managers, or other investors. These people’s opinions can offer valuable insights. It won’t be necessary to do this every time once you get the hang of using comps to estimate values, but it is a good practice when you are starting out. The More You Know… As you can see, determining a home’s after repair value isn’t a terribly difficult thing to do. It takes a little time and investigative work on your part but is a valuable tool when you are looking to sell, whether it’s your personal home or an investment property. Sure, you don’t have to do this yourself. You could just reach out to some local Realtors and ask them to compute your home’s after repair value for you. But isn’t it better to have your own opinion before you talk to someone who is really only looking to make a commission? Do you have any questions for me about estimating ARV? Do you have any tips to add? Let’s talk in the comment section below.