ARV might be the most abused number in flipping.
Lender · Member since 2025 · 40 posts · 13 votes
ARV might be the most abused number in flipping.
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Specialist · NJ · Member since 2022 · 1k+ posts · 649 votes
7moThey are all over the place. I feel like there needs to be some regulatory body. Lenders, Appraisers, and Agents never, ever agree.
ARV can be a killer on a flip. You can get an ARV that helps you during the bridge loan and then when you go to sell it the buyer's appraisal is lower, much lower. Now what? Things can change in six months.
You need more than a buffer. I have consulted on 40+ fix n flips in the last 3 years and I can tell you from first hand knowledge that a good deal on paper can break you in reality. X factors like market shifts, 3rd party analysis/performance can and will kill you.
The only way to really do fix n flips successfully is to have a large amount of wiggle room. You have to source the property at a steep discount to start. You buy a 100k home for 65k at short sale, foreclosure, or auction. Now you have a 35% head start on the project costs.
Now the house needs 70k in work to get a C/O. Now you are in 135k. But these houses are worth 220k - 250k.
Now you have options. You can give it away on the market for 189k and you still make 50k. Or you can refi out 165k or so and recoup your money plus 30k and get a renter in there.
Deals fail because:
Cost basis is way too high
Team lack of performance
Long Deal cycles
Expensive Carrying costs
I've found a model that eliminates all of the above and it has been working great. 65% return last six months. Longest deal has been 5 months. Shortest 3 months.
11 Replies
- Specialist · NJ · Member since 2022 · 1k+ posts · 649 votes7mo
They are all over the place. I feel like there needs to be some regulatory body. Lenders, Appraisers, and Agents never, ever agree.
ARV can be a killer on a flip. You can get an ARV that helps you during the bridge loan and then when you go to sell it the buyer's appraisal is lower, much lower. Now what? Things can change in six months.
You need more than a buffer. I have consulted on 40+ fix n flips in the last 3 years and I can tell you from first hand knowledge that a good deal on paper can break you in reality. X factors like market shifts, 3rd party analysis/performance can and will kill you.
The only way to really do fix n flips successfully is to have a large amount of wiggle room. You have to source the property at a steep discount to start. You buy a 100k home for 65k at short sale, foreclosure, or auction. Now you have a 35% head start on the project costs.
Now the house needs 70k in work to get a C/O. Now you are in 135k. But these houses are worth 220k - 250k.
Now you have options. You can give it away on the market for 189k and you still make 50k. Or you can refi out 165k or so and recoup your money plus 30k and get a renter in there.
Deals fail because:
Cost basis is way too high
Team lack of performance
Long Deal cycles
Expensive Carrying costs
I've found a model that eliminates all of the above and it has been working great. 65% return last six months. Longest deal has been 5 months. Shortest 3 months. - 7moJ CastroBusiness MemberLender · Florida · Member since 2025 · 673 posts · 240 votes
Quote from @Doug Clark:
I see a lot of deals where everything hinges on one perfect comp at the very top of the market. If that comp doesn’t hold, the entire flip gets tight really fast.
Lately, I’ve noticed the deals that survive (and still make sense) are the ones underwritten with conservative ARVs, realistic timelines, and a little breathing room for surprises. Optimistic ARVs can help get a deal under contract, but conservative ARVs are what actually protect your profit.
Not saying every deal has to be ultra-pessimistic, just that building in a buffer seems to matter more now than it did a few years ago.
Curious how others are handling ARVs right now. Are you leaning conservative, averaging comps, or still pushing top-of-market assumptions?
This is a really solid observation—and one we’re seeing consistently on the lending side.
Deals that rely on a single “hero comp” at the top of the market tend to be the first ones to feel pressure when timelines stretch, buyers hesitate, or appraisals come in light. In contrast, the transactions that continue to perform are usually underwritten with defensible ARVs, realistic absorption assumptions, and margin for error.
From our vantage point, a few things have become increasingly important:
Averaging comps rather than anchoring to the highest sale
Giving more weight to most recent closings over peak pricing
Stress-testing ARV against slightly longer hold times and softer exits
Leaving room for execution risk—because something almost always pops up
Optimistic ARVs may help a deal look good on paper, but conservative ARVs are what keep projects financeable and profitable when conditions change mid-project.
We’re not advocating for pessimism—just discipline. Deals that can still work when the numbers are tightened tend to be the ones that close smoothly and perform best.
Curious to hear how others are adjusting assumptions as well—especially across different markets where price sensitivity varies.
- 7moBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Common problem....and I've fallen prey to it myself...I think part of it is just human nature.
We all want the big payday, don't we, Lol.....
- 7moPeter MckernanBusiness MemberResidential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
I believe in this market (depending on what market you are in). You need to really go below the last comps on the ARV and use more of a 55% rule verse the 70% rule when you are trying to save time to really dig in on the numbers. I just comped a deal for a client and we put the ARV 15K below the last comp that sold. Also, we did all the other numbers. So, this gives us great time for DOM and out price to be successful.
The McKernan Group4.957 Reviews - 7moBo SmithPro MemberHinton, WV · Member since 2026 · 1k+ posts · 373 votes
This hits hard. One thing I started doing: scoring each comp on quality, not just picking the best ones. Recent sale + similar condition + same micro-market gets full weight. Older sale or different condition gets discounted. Helps avoid that single perfect comp trap you're talking about. How do you weight your comps when they're all over the place?
- Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes7mo
This must be the most predictable post I've ever read. Since 2010 or so, as prices have been doing nothing but going up, it was difficult to lose money on any sensibly priced flip. Now that prices are flat, at best, and days on market are increasing, all of a sudden it's important to tighten up those comps?
Sorry, but it's always been important to properly estimate the ARV, construction, and all major costs associated with a flip. Since COVID, construction costs, the second greatest expense behind purchase price, have been the most volatile of all the expenses associated with house flipping. In fact, flat sales prices make it easier to comp a property with more certainty. Now, all of a sudden, it's crucial to hit the ARV precisely?
Though it's always been important to estimate expenses, the bigger problem is desperation among the house flipping community. Thin deals, high risk, and a willingness to sacrifice profit just to keep the pipeline full have been the norm lately. Lenders, who participate in this race to the bottom and who will fund almost any deal so they can keep their pipeline full, encourage the desperation and don't help. Many of these lenders are new to the game and use conventional lending criteria to make loans. Naturally then, there is a focus on ARV, often at the expense of everything else that actually determines success or failure.
Lend to experienced borrowers with proven track records who've been through some ups and downs. Use sensible LTVs and cost estimates. Thinking that, "... everything hinges on one perfect comp...," and if not, "... the entire flip gets tight really fast...," ignores many other expenses and risks that compound far more quickly than a missed ARV. Plus, as a lender, if you are making ~60% LTV loans, how accurate does your ARV need to be?
Anyone can make a bad deal. Patience, an attribute that is rare among many flippers and virtually nonexistent among most lenders, is the easiest way to protect yourself and your borrowers and not participate in the nonsense that defines the current cycle.
- 7moJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Jeff S.:
This must be the most predictable post I've ever read. Since 2010 or so, as prices have been doing nothing but going up, it was difficult to lose money on any sensibly priced flip. Now that prices are flat, at best, and days on market are increasing, all of a sudden it's important to tighten up those comps?
Sorry, but it's always been important to properly estimate the ARV, construction, and all major costs associated with a flip. Since COVID, construction costs, the second greatest expense behind purchase price, have been the most volatile of all the expenses associated with house flipping. In fact, flat sales prices make it easier to comp a property with more certainty. Now, all of a sudden, it's crucial to hit the ARV precisely?
Though it's always been important to estimate expenses, the bigger problem is desperation among the house flipping community. Thin deals, high risk, and a willingness to sacrifice profit just to keep the pipeline full have been the norm lately. Lenders, who participate in this race to the bottom and who will fund almost any deal so they can keep their pipeline full, encourage the desperation and don't help. Many of these lenders are new to the game and use conventional lending criteria to make loans. Naturally then, there is a focus on ARV, often at the expense of everything else that actually determines success or failure.
Lend to experienced borrowers with proven track records who've been through some ups and downs. Use sensible LTVs and cost estimates. Thinking that, "... everything hinges on one perfect comp...," and if not, "... the entire flip gets tight really fast...," ignores many other expenses and risks that compound far more quickly than a missed ARV. Plus, as a lender, if you are making ~60% LTV loans, how accurate does your ARV need to be?
Anyone can make a bad deal. Patience, an attribute that is rare among many flippers and virtually nonexistent among most lenders, is the easiest way to protect yourself and your borrowers and not participate in the nonsense that defines the current cycle.
Jeff its highly regional as well.. some markets my clients that BRRR get refi appraisals but the houses if flipped would never actually sell for that amount.. Not sure how those apprasials come in like that.. but then sometimes they come in way low and the BRRR client needs to feed the deal to pay us off.
Also I find in some markets its just SOP no matter what you ask for the property offers are going to come in lower than ask just as a standard practice in that particular market.. Where out west here offers generally are at ask or maybe a little less or just ask for closing concessions or even add concessions to the price.
In the markets that SOP is to offer less one just needs thick skin and counter back there is usually a deal to be made.. I know with my new builds in Oregon we would occasionally get a low ball and we just counter back no emotion and half the time we put it together the other half the low baller needs to go to another seller.
- Member since 2026 · 97 posts · 57 votes7mo
Agree with the points here about averaging comps and stress testing. The hero comp trap is real and it kills deals when the market softens even 5-10%.
What I've started doing is running three scenarios before I commit to any deal. Best case (top comp holds), realistic case (average of 3-5 recent comps), and worst case (lowest recent comp minus 5%). If the deal only works in the best case scenario, I either renegotiate or walk.
For comp selection, I stick to sold properties within 90 days, same bed/bath, within 0.5 miles, and similar sqft. Active listings tell you asking prices, not what buyers will actually pay. I pull comps from Redfin manually and also run them through PropLab to cross-check the adjusted values. Sometimes the automated analysis catches things I missed, like a comp that looks similar but sold way above market because of a unique lot or extra parking.
The biggest mistake I see newer flippers make is anchoring to what they want the ARV to be instead of what the comps actually support. If your deal needs a $350k ARV to work but the comps say $320k, the comps are right and your deal is wrong.
Peter's point about using a 55% rule instead of 70% is solid advice in this market. Margins are tighter and leaving more room means you can still make money if the exit takes longer or comes in light.
- 7moBryan HartlenPro MemberInvestor · Phoenix, AZ · Member since 2018 · 313 posts · 157 votes
@Doug Clark we always look for 3 - 5 comps with similar sf, similar style, within 3 - 6 months and 0.5 - 1 mile. Unfortunately, not every property can be comped that easily. That's when it gets grey, and you need to bring some rational judgement into the process and really need to be careful of wishing the property to work. Once we have the best comps available, we never build our plan on the highest comp but I'll be honest I'm always thinking/hoping that we can get it ;-). We build our pricing on something closer to the average ARV and make sure we can exit without a loss in the worst case scenario.
- Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes7mo
I'm seeing a LOT of non-performing DSCR and bridge loans for rentals and Fix n Flips coming out the past couple years, which are accelerating. The main thing I'm noticing, which is a recurring theme, is that the supposed ARV used to underwrite the deal is sky high. I oftentimes scratch my head trying to determine how they reached such a lofty value. I think once the borrower and the lender realize that the ARV is way too high is when they both capitulate. The borrowers stop their rehab and the lender sells off the loan.
- Lender · Marlboro, NJ · Member since 2025 · 243 posts · 148 votes7mo
I agree, and I'd add that ARV isn't just about price, it's about timing.
Even a reasonable ARV can become dangerous if the exit window stretches. Higher carrying costs mean the deal is effectively re-underwritten every month it doesn't sell. That's where tight flips quietly turn into losers.
The flips I’ve seen hold up lately aren’t anchored to one top-end comp. They assume an average or slightly discounted exit and still work if days-on-market extend or buyer incentives creep in.
ARV optimism used to be a margin enhancer. Now it feels more like a risk amplifier.
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