The most dangerous number in a flip isn’t the rehab budget.

It’s not your contractor’s bid. It’s not even the MAO (Maximum Allowable Offer) you write on the contract.

It’s the ARV, After Repair Value.

If that one number is off, everything is off. Overestimate your ARV, and your margins evaporate. You could hit your timelines, stay under budget, and still walk away with a loss, all because you aimed for a price the market wouldn’t support.

In this guide, we’ll explore why so many flippers get ARV wrong, how to stop relying on guesswork, and how to build a repeatable system for comping deals like a pro.

The Real Cost of Overestimating ARV

Flipping is a game of tight margins. Most investors aim for 10–20% net profit, meaning a swing of 5%–10% in either direction can make or break the deal.

If your ARV is even 5% too high, that could mean:

• A $15K–$25K loss on a median home

• A forced price drop at resale

• Longer days on market (DOM)

• Nervous lenders or partners

• Zero margin for unexpected costs

Here’s a brutal truth: most ARVs are inflated not because of the market, but because investors want the deal to work.

You want the numbers to make sense. So you stretch. Just a little.

Until a “safe” $325K ARV becomes $340K.
Until a “tight but doable” MAO becomes a losing offer.
And you end up justifying your ARV instead of verifying it.

7 Reasons Flippers Overestimate ARV

Let’s break down the common traps investors fall into when running comps:

1. Using Active Listings Instead of Sold Comps

The MLS is full of properties that haven’t sold, and some never will.

Active listings show what sellers hope to get, not what buyers will actually pay.

Pro investors only use closed sales, ideally from the last 90–180 days.

2. Relying on Price per Square Foot

Averages can be misleading.

A 3,000 sq ft house that sells for $450K doesn’t mean your 1,500 sq ft house will sell for $225K, especially if your layout, finishes, or lot size differ.

Use whole dollar comparisons, not just square footage math.

3. Using Unrenovated Homes as Comps

If your exit strategy is to sell a fully renovated house, you can’t compare it to a dated property with linoleum floors and 1990s cabinets.

Make sure your comps reflect similar finish levels. Use photos to validate this.

4. Comparing Across Neighborhood Boundaries

Appraisers and buyers care about micro-markets, school districts, zip codes, even subdivision names.

A 0.4-mile difference might put you in a totally different neighborhood with different pricing expectations.

5. Ignoring Lot Size and Layout Differences

A house with a big backyard or pool will sell for more than one without, even if the interiors are similar.

Likewise, weird layouts, long driveways, corner lots, or flag lots can drag value down.

6. Using the Highest Sale as Your Benchmark

Everyone wants to believe they’ll get top dollar.

But the highest comp is rarely repeatable; it might’ve had premium finishes, a unique feature, or been sold during a hot week.

Use the middle or conservative end of the comp range for your ARV.

7. Cherry-Picking Comps to Justify the Deal

This one hurts the most, because we all do it.

You find one good sale and ignore the five that sold lower. You tell yourself your rehab will be better. That you’ll “force” the extra $20K.

But the market doesn’t care how hard you worked; it only pays what it pays.

How a Pro Actually Comps a Property

Running comps is not just a quick Zillow scan. It’s a process.

Here’s how professionals comp properties before making offers:

Step 1: Define Your Subject Property

Before comparing, get crystal clear on what you're analyzing:

• Bed/bath count

• Square footage

• Lot size

• Year built

• Style (ranch, two-story, split-level, etc.)

• Location (school district, subdivision, zoning)

• Planned renovation level (light, medium, full gut)

Your comps must match both the raw specs and the renovation scope.

Step 2: Set a Geographic Boundary

Stay tight.

• In dense cities: 0.25–0.5 miles max

• In suburbs: 0.5–1 mile radius

• Rural areas: Same school zone and similar street type

Always prioritize the same neighborhood, same school district over sheer distance.

Step 3: Set a Time Window

Recent sales reflect current demand.

• Hot market: 0–90 days

• Normal market: 0–180 days

• Softening market: 0–120 days and price-adjust for DOM

Ignore comps over 6 months old unless you adjust for current pricing shifts.

Step 4: Filter for Similar Properties

Use filters on MLS, PropStream, Privy, or Zillow:

• ±15% square footage

• ±1 bedroom and ±1 bathroom

• Similar lot size and structure type

• Updated or renovated finish levels

Once filtered, review the photos. This is key.

Two homes may look the same on paper, but if one has granite and the other has formica, they’re not equals.

Step 5: Analyze the Sale Prices

Sort your best 3–5 comps.

• Eliminate the outliers

• Take a weighted average

• Be conservative: lean toward the lower middle of the range

Example:

Comp 1: $320K (fully updated)
Comp 2: $315K (updated, smaller)
Comp 3: $330K (over-renovated, best in neighborhood)

You might set ARV at $317K–$320K, not $330K.

Step 6: Adjust for Your Scope of Work

Ask: Will my renovation exceed, match, or fall short of these comps?

If you’re doing a light update and the comps were fully remodeled, shave 5%–10% off.

If your layout is worse (awkward floorplan, fewer windows), adjust down.

If your lot is larger or your finishes are above average, you may adjust slightly up, but don’t assume a premium unless the market supports it.

What to Watch Out for When Comping

Bad Photos or No Interior Shots

This often means the home wasn’t renovated. If photos are blurry or missing, assume it was sold as-is, and don’t use it as an ARV comp.

Price Anomalies

If one comp is significantly higher or lower, dig deeper:

• Was it a divorce sale?

• Did the buyer overpay to win a bidding war?

• Was it a sale between relatives?

• Was it cash vs. financed?

Anomalies can mislead your whole projection.

Long Days on Market (DOM)

If a comp took 90+ days to sell, its sale price may not reflect healthy demand.

Prioritize comps with fast DOM, they’re stronger indicators of what buyers are excited about.

How to Adjust Your Offer When ARV Is Uncertain

Sometimes, your comps won’t be perfect. Maybe the property is in a transition area. Maybe you’re renovating to a level the neighborhood hasn’t seen yet.

Here’s what to do:

• Use two ARV scenarios: Conservative vs. Optimistic

• Plug both into your MAO formula

• Make your offer based on the conservative case

• Use the upside as a bonus, not the baseline

This protects you from letting “best-case thinking” become “baseline thinking.”

The 5-Minute ARV Check (When You’re in a Rush)

If you’re reviewing lots of deals daily, you need a shortcut.

Here’s a rough “quick comp” method you can use in 5 minutes:

• Go to Zillow or Redfin

• Search by sold homes only

• Filter for same bed/bath, within 0.5 miles

• Sort by newest sold

• Click into top 3 sales and review photos

• Compare finishes, layout, and location details

• Pick the lowest of the 3 for your ARV

This won’t be perfect, but it avoids overpromising to yourself.

Pro Tools to Improve Your Comping Game

If you’re serious about flipping or wholesaling, consider upgrading your tools:

• MLS access (through agent or brokerage)

• PropStream: Nationwide data, filters, comp tools

• Privy: Investor-focused comp engine with MLS tie-ins

• BatchLeads: Pull data and comp simultaneously

• DealCheck.io: Mobile-friendly ARV analyzer

• REI/Flip calculators: To plug ARV into full profit modeling

When to Walk Away

You did the comp work. You ran the numbers. And you realize...

The ARV isn’t what you hoped. The profit’s not there. The seller won’t budge.

Here’s what separates a pro from a gambler:

You walk.

No comping trick can save a deal with bad fundamentals.
No “what if” is worth risking your capital.
And no emotional attachment will increase your resale price.

The ARV is Sacred

ARV isn’t just a number; it’s a promise to yourself and your business.

It determines what you can offer, how much you can borrow, how long you can hold, and what your final payday looks like.

If you treat it casually, you’ll lose money.

But if you comp like a pro, with data, discipline, and skepticism, you’ll gain clarity, avoid costly mistakes, and close more profitable flips.

Respect the ARV. Or it will humble you.