Every offer starts from the after-repair value
The after-repair value (ARV) is what the house should sell for once it is fixed up to the standard of nearby renovated homes. Buyers estimate it from recent sales of comparable houses, the same sales comparison method appraisers use for single-family homes.
Good comparables are close by, similar in size, age and style, and sold recently. Only sold houses count; asking prices don’t. The buyer then adjusts for differences. If a comparable has a second bathroom your house lacks, its price is adjusted down to match yours. Because those adjustments involve judgment, two people can reach different ARVs for the same house.
In older cities this step can be tricky. Canton’s median year built is 1947 according to the Census Bureau’s 2020-2024 estimates, and about 41% of its homes were built in 1939 or earlier. Two houses on the same street can be decades apart in condition, so the choice of comparables makes a big difference.
Then the buyer prices the repairs
The repair estimate is the cost of bringing the house up to the ARV standard. It’s usually the most debated number in the offer.
A buyer walking the house is typically looking at:
- Big-ticket systems: roof, foundation and basement water, furnace and air conditioning, electrical panel and wiring, plumbing and sewer line.
- Finish work: kitchen, bathrooms, flooring, paint, windows and doors.
- Code and safety items: anything a city inspector or a future buyer’s lender would flag.
- Cleanout: removing furniture and belongings left behind.
ATTOM estimates that rehab and other costs on a typical flip run about 20% to 33% of the after-repair value. That range is wide because houses are. A cosmetic update and a gut renovation on the same ARV can differ by tens of thousands of dollars.
The costs sellers usually don’t see
After repairs, buyers also budget for costs that come from owning and reselling the house:
| Cost | What it covers |
|---|---|
| Purchase closing costs | Title, recording and other costs of buying |
| Holding costs | Property taxes, insurance, utilities and loan interest during the work |
| Selling costs | Agent commissions and the seller-side costs when they resell |
| Profit and risk | A cushion for surprises, plus the return that makes the project worth doing |
Time matters here. ATTOM found the typical flip took about 161 days from purchase to resale in the second quarter of 2026. Every month adds taxes, insurance and interest.
How landlords run the numbers differently
A buyer who plans to rent the house out may not use ARV the same way. Instead of asking what the house will resell for, a landlord asks what it will rent for and what it costs to own each month. Their math starts with expected rent, then subtracts property taxes, insurance, repairs, vacancy and management. What’s left has to justify the purchase price plus the renovation.
That’s one reason two cash offers on the same house can differ. A flipper and a landlord can both be honest and still reach different numbers, because one is pricing a quick resale and the other is pricing years of rent.
The 70% rule: a rule of thumb, not a formula
The “70% rule” is a shortcut many investors use to screen a deal quickly. It says a flipper shouldn’t pay more than 70% of the ARV, minus repairs.
Here is the example BiggerPockets uses:
- After-repair value: $150,000
- $150,000 x 0.70 = $105,000
- Minus $20,000 in repairs = $85,000 maximum purchase price
The remaining 30% of ARV is meant to cover holding costs, selling costs, surprises and profit. BiggerPockets itself calls it a guideline, not a hard rule. The percentage moves with the market, the price range and the exit plan, and landlords may pay more than flippers. It also only works if the ARV and repair numbers are right. A rule of thumb applied to a bad repair estimate still gives a bad number.
Treat the 70% rule as a way to understand why investor offers sit below retail prices, not as the formula any particular buyer uses. Every company sets its own approach. Ours is to walk the house with you, give you a written offer, and explain how we got to that number.
How to check the math on an offer you receive
You don’t need to accept a number you don’t understand. Ask the buyer for three things:
- Their ARV and the comparable sales behind it. Check those addresses yourself on the county property site or a listing site.
- Their repair list. A line-by-line list shows whether they priced a new roof you already have, or missed a cracked foundation wall.
- What else they deducted. Holding time, resale costs and their margin.
If you have documents a buyer didn’t know about, like a roof installed in 2021 or a recent furnace replacement, share them. Real information can move the number. For a sense of whether the result is reasonable, see what is a fair cash offer, and compare it with a list price using how much is my house worth.
When the math says list instead
If your house needs little work, the repair line is small and an investor’s margin is mostly coming out of your pocket. In that case a retail buyer, through an agent, will often pay more even after commission. Cash buyer vs Realtor shows how to compare the two nets. When repairs are large, timing is tight or the house is hard to show, a direct sale can still come out ahead once you count what you won’t spend. You can see the steps of ours on how it works.
