ARV Feels Kinda Arbitrary — What Really Goes Into It?

[Tajana Reagan]

I'm just getting started and trying to wrap my head around how ARV (After Repair Value) is actually determined. I've seen it thrown around a lot, but honestly, it seems kind of arbitrary sometimes.

What elements are typically considered when calculating ARV? Are there more detailed factors that go into it? And how do you avoid overestimating it when analyzing a deal?

Appreciate any insights—still learning the ropes!

[Ken M.]

Quote from @Tajana Reagan:

I'm just getting started and trying to wrap my head around how ARV (After Repair Value) is actually determined. I've seen it thrown around a lot, but honestly, it seems kind of arbitrary sometimes.

What elements are typically considered when calculating ARV? Are there more detailed factors that go into it? And how do you avoid overestimating it when analyzing a deal?

Appreciate any insights—still learning the ropes!

It's very arbitrary.
Even appraisals are "best guess" opinions of value at a given time. 

I once had two appraisals done a week apart. I didn't like the first one, so I ordered a different appraiser. First appraisal came in at something like $400,000, the other came in at $450,000. They were $50,000 apart. That's not pocket change. 

I listed For Sale By Owner and it sold for $500,000. 
There is a lot going on in that experience, but let it be said

" A property is worth what a willing buyer will pay for a property to a willing seller".