On a fix-and-flip loan, the after-repair value (ARV) is the number everything else is built on. We lend up to 65% of it, so if your ARV comes in $30,000 lower than you planned, the most you can borrow drops by $19,500, and that gap comes out of your pocket.
Here's how lenders and appraisers arrive at ARV, how to comp your own deal before you make an offer, and the mistakes that make values come in short.
What ARV means (and what it doesn't)
ARV is an estimate of what the property will be worth once your planned repairs are finished. It's based on what similar, renovated homes nearby have actually sold for. It isn't the list price of the house down the street, an online estimate, or what you hope a buyer will pay. (Other loan terms are defined in our glossary.)
Because ARV depends on the finished product, your scope of work matters as much as the comps. A full gut with a new kitchen, baths and systems supports a different value than paint and floors. Our renovation tips for flips cover where the money usually pays back.
How appraisers pick comparable sales
Appraisers use the sales comparison approach: find recent sales of similar homes, then adjust for the differences. In Maryland, appraisers are licensed by the state's Commission of Real Estate Appraisers. Fannie Mae's guidelines, which most residential appraisers follow, set a few ground rules (Fannie Mae Selling Guide, comparable sales):
- Closed sales, at least three of them. Listings and pending sales can support the value, but they don't replace closed sales.
- Recent. Comps should generally have closed within the last 12 months. In a market that's moving, the most recent few months carry the most weight.
- Close by. Sales from the same neighborhood or subdivision are the best evidence. If the appraiser has to go farther out, they have to explain why.
From there, the appraiser adjusts each comp up or down for differences such as size, bedrooms and bathrooms, garage, lot and condition, and lands on a value for your property as repaired. Those adjustments are supposed to reflect how buyers in that market actually behave, not rules of thumb (Fannie Mae, adjustments to comparable sales).
How to comp your own deal before you offer
Do this before you sign a contract. Still looking for deals? Start with how to find properties to flip.
- Start with sold homes, not listings. Asking prices tell you what sellers hope for. Closed prices tell you what buyers paid.
- Stay close. Same subdivision or the same few streets first. Don't cross a line that buyers care about, such as Baltimore City and Baltimore County, or two different school zones.
- Match the finished product. Compare your planned rehab to homes that sold renovated, not to estate sales or homes that needed work.
- Match size and layout. Look for similar above-ground square footage, bedroom and bathroom counts, and style (rambler, colonial, townhome).
- Check the dates. The last three to six months tell you the most. Older sales may need a time adjustment.
- Verify the sale. Confirm the price and date in the state's SDAT real property search, which shows recorded transfer information for Maryland properties.
A simple example
Say you're buying a 3-bedroom, 2-bath, 1,600 sq ft colonial and plan a full cosmetic rehab with a new kitchen. You find three renovated sales nearby. The numbers below are made up to show the method.
| Comp | Sold for | Difference from your house | Adjustment | Adjusted value |
|---|---|---|---|---|
| A, same street, 2 months ago | $425,000 | Same size and layout | $0 | $425,000 |
| B, 0.4 miles, 3 months ago | $445,000 | Has a garage yours doesn't | −$15,000 | $430,000 |
| C, 0.5 miles, 5 months ago | $405,000 | One fewer full bath | +$10,000 | $415,000 |
| Reasonable ARV range | $415,000 to $430,000 | |||
In this example, planning around $420,000 instead of the best comp's $445,000 keeps your offer and your rehab budget honest. Real adjustments depend on the market, so treat these as a way of thinking, not fixed values.
Mistakes that make ARV come in short
- Using online estimates or list prices. They often run ahead of what renovated homes actually close for.
- Borrowing comps from a better neighborhood. A sale half a mile away across a major road or school boundary can be a different market.
- Counting the basement as living space. Appraisers generally report finished basement space separately from above-ground living area and value it at a lower rate.
- Unpermitted work. Additions or conversions done without permits may get little or no credit, and can slow a sale. See electrical and water upgrades in Maryland for what usually needs a permit.
- Over-improving. Every street has a ceiling. Finishes that are far above the neighborhood rarely pay back in full.
- Underselling the scope. If the comps are fully renovated homes, your budget has to deliver the same finished product.
See how ARV changes your loan
We lend up to 65% of ARV or up to 85% of your total cost (purchase plus rehab), and typically use the lesser of the two. Try lowering the ARV below to see how much more cash you'd need. You can read more about the limits in fix-and-flip loans up to 65% ARV, explained.
Quick loan estimate
Estimate only, before closing costs, interest and fees. Final terms depend on the property, the borrower and the deal.
With the example numbers, 65% of $420,000 is $273,000 and 85% of the $325,000 total cost is $276,250, so the estimate is $273,000. Drop the ARV to $390,000 and the loan falls to $253,500, which means about $19,500 more of your own cash. For the full picture, see how to calculate your real profit on a fix-and-flip, and if the value comes in short after the work, what happens if it doesn't sell.
What to send us with your deal
Send your ARV estimate with one or two of your best comps and a one-sentence scope of work. We'll look at the comps with you, and complete packages usually get a soft quote the same day (here's how our process works). To see what we look at besides the property, read how to qualify for a hard money loan.
- Address
- Purchase price
- Rehab (one-sentence scope)
- Exit (flip or BRRRR)
- ARV estimate plus 1 or 2 comps
- Timeline to close
Flipping in a specific county? See our guides to Baltimore County and Prince George's County. Planning to hold instead of sell? See our fix-and-hold loans.
Not sure your ARV will hold up? Send the address, your comps and your numbers, and talk to the person who makes the decision.
Appraisal guidelines are summarized from Fannie Mae's Selling Guide as of November 2026. The example and adjustments are illustrative only. Every property and appraisal is different.