ARV in Real Estate: After Repair Value Explained

After-repair value (ARV) is the market value a property would command if fully renovated and in excellent condition. It's not the "as-is" value or your purchase price; it's the projected value post-renovation. Example: property in distressed condition is worth $200k as-is. After full renovation (roof, HVAC, plumbing, electrical, cosmetics), it's worth $330k renovated. ARV = $330k. Why it matters: LYNK Mortgage uses ARV to calculate LTV (loan-to-value). If ARV is $330k and we loan $230k, our LTV is 70% (loan / ARV). If you overestimate ARV as $400k, our perceived LTV is 57%, but true LTV is 70%—you're overleveraging and hiding risk. Accurate ARV is existential for fix & flips: misjudge by 10% and your entire deal profit evaporates.

Find recent comparable sales (comps) of similar properties that recently sold in the same market. Criteria: same neighborhood (or adjacent), similar property type (single-family, condo, etc.), sold within 3-6 months, in similar condition (renovated, not distressed). Example: estimating ARV for a 3-bed, 2-bath house in downtown area. Pull 3-5 recent sales: Property A: 3-bed, 2-bath, 1,500 sqft, sold 2 months ago for $340k. Property B: 3-bed, 2-bath, 1,450 sqft, sold 4 months ago for $335k. Property C: 3-bed, 1.5-bath, 1,400 sqft, sold 1 month ago for $310k (lower because 1.5 bath). Average adjusted: $325-330k. Your target property after renovation should trade around $325-330k. Conservative estimate: $320k (account for unknown issues). LYNK Mortgage and professional appraisers use this method, pulling 4-8 comps and weighting recent, similar sales most heavily.

Wishful thinking: estimating ARV higher than market supports ("my renovations are premium, I can charge 10% more"). Market doesn't care; use comps. Using outdated comps: pulling 1-year-old sales in fast-moving markets introduces lag. Use 3-6 month recent sales. Using wrong property type: comparing single-family to condo, or downtown condo to suburban. Comps must be truly similar. Not adjusting for condition: comp sold at $330k in good condition; your property will be similar, so ARV $330k is reasonable. But if you're cherry-picking cosmetic-only upgrades (paint, flooring) while competitors did $30k more, your ARV might be $315k, not $330k. Ignoring market trends: in declining market, recent comps may be 5-10% lower than 6 months ago. Lag your estimates downward. LYNK Mortgage's appraisers catch these mistakes; ARV reconciliation is part of appraisal process.

You submit: purchase contract, comp list (your research), property photos as-is, contractor estimate/scope of work. LYNK Mortgage orders appraisal (independent third-party appraiser). Appraiser inspects property as-is, reviews contractor scope, pulls independent comps, and estimates ARV post-renovation. If appraiser's ARV differs materially from yours, LYNK Mortgage discusses discrepancy: Is your scope of work clear? Are your comps valid? Is appraiser too conservative? Sometimes borrower and appraiser align on ARV with minor variance (±5%). Sometimes material variance (borrower $350k, appraiser $310k). If variance is large, LYNK Mortgage may decline or require you to lower purchase price / reduce loan amount. This appraisal process protects both you and LYNK Mortgage: you're not overleveraging, we're not funding overvalued property.