Tag Archive for: Allowance items in new home construction

Allowances items are an important part of your Building Contract and Home Specifications. But how can you make sure your allowance items for appliances, cabinets, lighting, plumbing fixtures, and flooring are reasonable since the cost of these items are estimated?

Some homeowners have trouble making decisions before work begins. In those cases, the builder can allocate a dollar amount to each category and let the homeowners choose specific products later.

That doesn’t mean homeowners can postpone thinking about these products altogether. For an allowance to serve the homeowners’ interest, it must be based on accurate numbers. The homeowners should at least decide what grade of products they want. That decision can require legwork as well as self-awareness.

If you go online to compare products and prices, the results can be misleading. Although internet pricing may show the relative costs of different grade levels, the quality and warranty coverage may not match that of products sold by a professional supply house.

The best way to create an allowance budget is to visit the builder’s recommended suppliers or showrooms. The builder can then work with the showroom after the initial visit to generate a realistic number for the grade of products the homeowners want. The time invested in this work will yield allowances based on real-world numbers, not on guesswork or wishful thinking.

The builder can also provide average dollar numbers based on past experience with similar projects, but this is only the first step. The homeowners need to ask follow-up questions of the builder. For instance – Light fixtures. How many of what kind of fixtures in the home are included in that Allowance. Does the Allowance include bulbs? Recessed cans, sconces and chandeliers come in a range of prices, so it’s also important to do preliminary shopping, pricing and estimate the number of light fixtures needed to determine a reasonable allowance for light fixtures.

Another example is tile. Your $5,000 shower tile allowance would cover the cost of a large-format ceramic or porcelain, but now you fell in love with travertine at the show room. It’s best to decide up front and budget for it, including finding out whether the price includes additional labor.

If you are talking to a few builders about your new home building project – make sure that quality levels for the allowance items are the same. If one builder bases its cabinet allowance on lower quality boxes while another assumes plywood, it’s not a meaningful comparison. (Comparing bids is notoriously difficult, which is why it’s better to find a trustworthy builder and then work with them to create a reasonable budget.)

The homeowners should also consider if allowances the builder gives are realistic.  That is a good question to ask of the builder’s homeowner references. Professional builders make sure customers understand what their budget will and won’t cover because they know the clients will be happier in the end.

There is a deadline for every allowance choice. Meeting this deadline is crucial to getting products delivered in time for installation. If the homeowners miss the deadline, the allowance money will still be there, but the delay will throw off the job schedule and could potentially raise the final cost.

In summary, it’s best to make as many product choices as possible before work begins, keeping the job running smoothly by doing your homework thoroughly