Home Building-Budget-Allowances

Home Building-Budget-Allowances

From: Ken

"I have heard General Contractors using allowances when a home buyer selects cabinetry, appliances, and fixtures.

Is there a percentage of the cost to build the home allocated to these allowances or do General Contractors make it up as they go?"

Hi Ken,

Allowances are for budget items that have not yet been selected at the time a General Contractor and a buyer sign a “Contract to build”.

Allowances are a necessary evil.

They not only include the ones you listed, but often others such as: light fixtures, plumbing fixtures, landscaping, wall covering, counter tops, door hardware, to name a few.

You can see some of the items mentioned as a percentage of total cost to build on my "Cost Estimating Explained" page.

A General Contractor may supply these allowance numbers based on what he or she feels is adequate, but it is up to the buyer to investigate the dollar amount of each allowance for each category that has an allowance to see if it is enough money to adequately satisfy their “consumer needs.

In other words, the buyer(s) MUST “shop” BEFORE signing the contract.

When you act as your “Own General Contractor”, you too will use “allowances” (for some of these items) as it is impossible to make final decisions on everything early in the cost estimating process.

If you have read my book(s) and read (virtually) everything on www.byoh.com, you know it’s all about “shopping” BEFORE you make a decision to build.

Shop well, but above all, have fun!
Carl