What Is ARV in Real Estate?

By Scott Durham · Licensed AZ Agent #SA63577000 · SellFastAZ · Updated May 2026

If you've ever gotten a cash offer on your home and wondered "how did they come up with that number?" — the answer starts with ARV.

Every legitimate cash buyer in Arizona uses ARV as their starting point. Understanding what it is, how it works, and how to check the math yourself puts you in a completely different position at the negotiating table. This guide covers all of it.

ARV Defined: What It Actually Means

ARV stands for After-Repair Value — what your home would sell for on the open market after it's been fully renovated and updated.

Note what ARV is NOT: it's not your current market value, not what Zillow says your home is worth today, and not what your neighbor's unremodeled house sold for last year. It's the price a buyer would pay for the finished, turnkey version of your property.

Cash buyers care about ARV because they're buying your home in its current condition, investing money to renovate it, and then selling it at ARV. The gap between what they pay you and what they eventually sell for has to cover:

• Renovation costs
• Holding costs (property taxes, insurance, financing during the renovation)
• Selling costs (agent commissions, closing costs — typically 6–8% of sale price)
• Their profit margin (why they're doing this in the first place)

Once you understand that math, cash offers stop feeling like lowballs and start making sense.

How Cash Buyers Calculate Their Offer Using ARV

The most common formula is called the 70% rule:

The 70% covers the buyer's selling costs + profit. The rehab subtraction accounts for what they'll actually spend fixing the place up. Here's a real-number example at a typical Phoenix price point:

Is $210K a fair offer on a house with a $380K ARV? If that rehab estimate is accurate, yes — it is. The buyer is spending $56K on renovation, another $26,600 in selling costs (7% of $380K), and clearing roughly $83,400 in profit for taking on the risk and doing the work.

If the rehab is lighter than estimated — say $30K instead of $56K — the offer might reasonably be $236K. That's why understanding your home's condition matters when evaluating any cash offer.

Why 70% — and When It's Different

The 70% rule is a rule of thumb, not a law. In practice:

• Higher-end markets (Scottsdale, Paradise Valley, Arcadia): Buyers can sometimes offer 72–76% of ARV. Here's why — on a $900K ARV home, the 7% selling costs are $63K, which still leaves room for a healthy margin even at a higher percentage. The math works out more favorably at higher price points.
• Riskier rehabs or lower price points: Buyers may drop to 60–65%. A gut renovation on a $200K ARV house leaves very little margin for error at 70%.
• High-demand flips in tight neighborhoods: Some buyers compete at 72–75% to win deals.

The short version: 65–75% of ARV minus rehab is the legitimate range. If an offer is 50% of ARV or lower, ask a lot of questions.

How to Check If an Offer Is Reasonable

You don't need to be an agent to run a basic sanity check on a cash offer. Here's how:

Step 1: Find 3 Recent Renovated Comps

Go to Zillow or Redfin and search for sold homes within 0.5 miles of yours, same bedroom and bathroom count, sold in the last 90 days. Filter to homes with updated kitchens and bathrooms — not as-is sales, not foreclosures. The average sale price of those 3 homes is a reasonable ARV for your property.

Step 2: Apply the Formula

Take your ARV × 70%, then subtract a realistic rehab estimate:

• Light cosmetic (newer build, good bones): $20–30/sf
• Mid-level full interior (1980s–1990s, dated but intact): $35–45/sf
• Full interior + exterior (pre-1970 build): $45–55/sf
• Gut rehab (structural issues, major systems): $60–70/sf

Step 3: Compare to the Offer

If the offer is within 10–15% of your calculated number, it's in fair territory. If it's significantly lower, ask the buyer to walk you through their ARV comps and rehab estimate. A legitimate buyer will do this without hesitation.

What "Fair" Looks Like in Scottsdale and Phoenix

Arizona's two biggest cash-buyer markets have different dynamics:

Scottsdale (and North Scottsdale / Paradise Valley)

Luxury ARVs push into the $600K–$1.5M+ range. At these price points, 72–75% of ARV is achievable because the absolute dollar amounts are large and selling costs as a percentage are more favorable. A Scottsdale buyer who passes on a deal at 72% often loses it to a competitor. If you own a distressed Scottsdale home with a $700K ARV, a fair offer range might be $430K–$475K before rehab subtraction — which can still leave you with $350K–$420K after a heavy renovation discount.

Central/South Phoenix (85007, 85009, 85031)

Entry-level price points mean tighter margins. ARVs of $200K–$350K force buyers to be more conservative. The 70% floor tends to hold firmly, and with substantial rehab costs on older homes, offers in the $130K–$200K range on $250K–$300K ARV properties are common — and legitimate. These are 1940s–1960s builds with deferred maintenance, and the renovation costs reflect that.

Red Flags in Cash Offers

Not every "cash buyer" is operating legitimately. Here's what to watch for:

A legitimate cash buyer has the funds, has seen the property, can explain their math, and doesn't pressure you to decide before you've had a chance to think. If something feels off, it probably is.

Scott's Approach to ARV and Offers

When I make an offer on a Scottsdale or Phoenix home, I show you the comps I used. I show you my rehab estimate broken down by category. I explain exactly how I got to the number.

You can disagree. If you have comps that show a higher ARV, bring them. I'll either adjust the offer or explain specifically why I weighted certain sales differently. The goal isn't the lowest offer I can get away with — it's a number that works for both of us.

If it doesn't work, that's fine too. I'd rather you walk away with clarity than feel like you got played.

→ See exactly how Scott's offer process works
→ Compare a cash sale vs. listing on the MLS
→ Scottsdale-specific information
→ Get your cash offer and see the math for yourself

Frequently Asked Questions About ARV