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What Does ARV (After Renovation Value) Mean?



Whether you’re sprucing up your living space for personal enjoyment or aiming to boost its resale potential, understanding the concept of ARV is crucial. Reliable home remodeler DreamMaker Bath & Kitchen of St. Louis Park discusses what this means, the factors affecting it and why such appraisals matter.

Explaining After-Renovation Value (ARV)

ARV is a metric used to estimate the future value of a property after it undergoes necessary renovations or repairs. Unlike its initial purchase price or current market value, ARV makes an estimate of what the property is worth after the project. This is especially helpful if you’re looking to enhance the value of your home through strategic renovations.

Factors Affecting ARV

Several factors influence the ARV of a home. These include: 

  • The scope and quality of renovations
  • The property’s location
  • The current real estate market trends

For example, upgrades in key areas such as kitchens and bathrooms often yield a higher return on investment (ROI). Additionally, the property’s proximity to school, work and other amenities can significantly boost its ARV.  For accurate estimates, you can ask the help of your local home renovator.

The Importance of ARV in Home Renovation

Knowing what an ARV is can help you in various ways. For one, it helps you secure financing — lenders may consider the potential ARV to determine borrowing power. If you have plans to sell in the future, the ARV can also help you estimate realistic sale price expectations and guarantee a healthy ROI. 

Calculating ARV

The process of calculating ARV involves adding the cost of planned renovations to the property’s current value. However, accuracy in this calculation requires considering comparables (comps), or similar properties that have recently sold. These comps help gauge the potential market value after renovations. Professional appraisals, both pre- and post-renovation, can offer additional insights into the property’s worth, guiding more informed renovation decisions.

The Role of Professionals in Estimating ARV

Given the complexities involved in calculating ARV, enlisting the help of real estate professionals, such as agents with access to Multiple Listing Service (MLS) data, can be invaluable. Their expertise ensures a more accurate estimate, taking into account the nuances of the local market. Furthermore, working with a trusted general contractor ensures that planned improvements align with market demands, potentially maximizing ROIs.

Let’s Start a Conversation!

Need help improving your ARV? Count on us at DreamMaker Bath & Kitchen of St. Louis Park, your go-to remodeler serving homeowners in Vadnais Heights, Whitebear Lakes, Stillwater, Afton, and Sunfish Lake. Call us today at (952) 522-3008, or fill out this contact form to schedule an appointment.

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