After-repair value (ARV) is what a property should be worth after you finish fixing it up, not what it is worth today in its current condition. Investors estimate it from recent sales of comparable, already-renovated properties nearby, then work backward: the ARV sets the ceiling for what you can pay and still profit, and it drives how much a lender will advance on a rehab loan or a later refinance.
ARV underpins the common rule that a flipper's all-in cost (purchase plus rehab) should stay well under the ARV to leave room for holding costs, selling costs, and profit. Its accuracy lives or dies on the comparables: optimistic comps produce an inflated ARV and a deal that only works on the spreadsheet. ARV is also the target that forced appreciation and a rehab budget are aiming to hit.