Allowances and Working With Your Project Budget
Just like when you received a certain amount of allowance as a kid, when you build a new home, your contractor sets your product allowances. These are incorporated into your overall budget. Getting a good grasp of how exactly allowances work will go a long way to keep your project on budget. Equally important this will help alleviate mis-communications.
So how does this all work?
When your contractor prepares the bid for your home they take into account the cost of all the materials and labor that go into your project. Many of those items are preset, for instance, your lot price and the bid he receives for building supplies. Your allowances are the amount of money budgeted for the items you get to “shop” for. These items include:
Cabinets & Counters
Ask your contractor for a list of your allowances before your project begins. Ideally, the allowance should reflect the price point of the home. Obviously, a starter-home allowance for lighting will be lower than a high-end home — both to cover quantity of fixtures and higher-end selections. Feel comfortable with the overall allowance amounts your contractor is offering and know exactly what they are before you sign the final paperwork. You don’t want to be surprised if they’re lower than you expected and you end up paying overages for the products you choose. To say nothing of ultimately not getting the selections you wanted.
That’s not to say, however, that you won’t go over your allowances. In general, allowances may not cover items you splurge on. Those upgrades are your choice and your bill to pay so be sure to ask your contractor how overages are handled. And remember there’s flexibility in your allowances. Let’s say your selections came in $250 under the allowance set for flooring. You can take that $250 and apply it to your lighting package. Just be sure to communicate clearly with your contractor and keep records of your selections.
Working with the Product Showroom
Each contractor communicates what the allowances are differently. In some cases, your project may already be on the showroom’s radar if they submitted a bid for your project. But as a rule, be sure you know your allowance before you arrive at the showroom. On the other hand ask your contractor if they already shared that information. That way your salesperson is ready to guide you to the products that will keep you within your budget.
How HomeOnTrack Can Help
Use HomeOnTrack software to input your allowances at the beginning of your project. Then as you make your product selections a running total is reflected within the program. It’s the perfect tool to keep track of your selections and for your project and your budget to stay On Track! Learn about all of HomeOnTracks powerful features!