What Is After Repair Value (ARV)? How Cash Buyers Calculate Your Offer

What Is After Repair Value (ARV)? How Cash Buyers Calculate Your Offer

If you've ever gotten a cash offer on your home and wondered how the buyer arrived at that number, the answer is ARV — After Repair Value. Understanding ARV is the single most important thing you can do to evaluate whether a cash offer is fair or a lowball.

What Is ARV?

After Repair Value (ARV) is the estimated market value of a property after all necessary repairs and renovations have been completed. It's the number that represents what the home would sell for on the open market in its best possible condition.

Cash buyers use ARV as the starting point for their offer calculation. They then subtract estimated repair costs, holding costs, and their profit margin to arrive at the offer price.

The ARV Formula Cash Buyers Use

The standard formula is:

Cash Offer = ARV × 70% − Repair Costs

For example: A Fresno home with an ARV of $350,000 and $40,000 in needed repairs would yield:

$350,000 × 0.70 = $245,000 − $40,000 = $205,000 cash offer

The 70% factor accounts for the buyer's profit margin, holding costs (taxes, insurance, utilities during renovation), financing costs, and transaction costs (buying and selling commissions).

How ARV Is Calculated

ARV is determined by analyzing comparable sales (comps) — recently sold homes in the same neighborhood with similar size, age, and features, but in good condition. A good ARV analysis uses 3–6 comps sold within the last 6 months within a half-mile radius.

This is why Alder Heritage Homes provides a free third-party Broker Opinion of Value (BOV) with every offer. The BOV shows you the comps we used, so you can verify our ARV is accurate and our offer is fair.

Red Flags in Cash Offer Calculations

• No explanation of the offer: Legitimate buyers show their math. If a buyer won't explain how they calculated the offer, walk away.
• Inflated repair estimates: Some buyers pad repair costs to lower the offer. Ask for an itemized repair estimate.
• Low ARV: If the buyer's ARV is significantly lower than recent comparable sales, they may be using cherry-picked or outdated comps.
• No proof of funds: A real cash buyer can provide a proof of funds letter from their bank within 24 hours.

Get a Transparent Cash Offer from Alder Heritage Homes

We show you our ARV, our repair estimate, and our math with every offer. We also provide a free third-party BOV so you can verify our numbers independently. Call (559) 281-8016 or visit alderheritagehomes.com to get started.