How ESTI estimates a flip

Renovation cost

ESTI estimates two renovation scopes for every home. Moderate is a cosmetic refresh: demolition and prep, interior and exterior paint, flooring, countertops, plumbing and light fixtures, and clean-up. Full-scale adds cabinets, appliances, interior doors and trim, light framing and drywall repairs, and electrical and plumbing parts. Neither includes structural work or debris haul-off.

Each item is priced from the home's square footage, bedrooms, bathrooms and kitchens, using labor hours, labor rates and material costs. The total is then adjusted for local building costs with a cost index for the area, where 100 is the US average.

The estimate uses standard finishes. On the property page you can switch to premium or elite finishes, which add a set percentage to the renovation cost; the after-repair value stays the same.

After-repair value (ARV)

ARV is what the home could sell for once it is renovated. ESTI looks for comparable homes nearby, similar in size, bedrooms, bathrooms and age, that sold or went under contract recently. It starts with the closest and most recent sales and widens the search only when there are too few.

ARV is the median price per square foot of those homes times this home's size, with a small premium for the renovated condition.

Profit and ROI

Profit = ARV − purchase price − renovation − closing costs. Closing costs are 0.6% of the purchase price.

ROI = profit ÷ the total cost of the deal (mainly the purchase price, renovation and closing costs).

These headline numbers, the ones on search results, Profit Picks and these pages, assume a cash purchase with no agent commission, staging or financing costs. On a home's property page you can add those and change any number to see your own profit.

An example

A home is listed at $300,000. ESTI estimates a moderate renovation at $50,000 and an after-repair value of $400,000. Closing costs are 0.6% of $300,000, or $1,800.

Profit = $400,000 − $300,000 − $50,000 − $1,800 = $48,200. ROI = $48,200 ÷ $351,800 = 13.7%.

When ESTI does not estimate

ESTI shows "Can't estimate" instead of a profit when there aren't enough comparable sales to estimate the after-repair value, when the estimated ROI is above 35% (usually a sign of wrong listing data), or when the listing data looks wrong. Those homes are never Profit Picks and are left out of every market number.

City market numbers (prices, ROI and profit) use only homes with a reliable estimate. ESTI leaves out a city's market-wide ROI and profit when 15% or more of those homes show an estimated ROI of -40% or lower, as that many large losses usually means the local data is off. Those pages still show the Profit Picks and prices.

Profit Picks

Profit Picks are homes for sale or pending where ESTI estimates a strong profit after renovation, based on recent nearby sales. They are listed for cities with enough recent sales to estimate well and refresh once a day.

City market numbers

Each city page checks the single-family homes for sale or pending in ESTI search for that city. Homes for sale is the search count. Median list price, price per square foot and profit (shown only when positive) are medians of the homes with a reliable estimate, and the ROI tile counts the ones with an estimated ROI of 10% or more. Typical renovation is the median moderate renovation of the Profit Picks on the page, and local building costs come from the area's cost index.

The ZIP code table groups the Profit Picks by ZIP code, with the number of picks and their median price and ROI.

Estimates, not advice

ESTI's numbers are estimates made by algorithms from listing data and recent nearby sales. They can be wrong: listing details can be incomplete or out of date, and a home's condition can be better or worse than its listing suggests. They are not appraisals, inspections or financial advice. Inspect the home, get contractor quotes and talk to qualified professionals before you make an offer.