Building Allowance for 720K house in NE help

bluemerle715December 26, 2012

I am new to the forum, but have been reading it intently as we prepare to build a new house. Can you please let us know how reasonable these allowances are for a 720K house?

Thanks. Details below...

3400 square foot home in Rhode Island
4 bedrooms, 3.5 bathrooms

1. Oak flooring in the entire home (except ceramic tile in the laundry room, master bath and
upstairs baths) � allowance @ $7.00/square foot.
2. Flooring for finished portion of basement � carpet or tile @ $3.50/square foot.
3. Tile allowances for materials only � Master bath @ $5.50/square foot; additional baths @
$4.50/square foot.
4. 50 recessed can lights throughout the house.
5. Lighting fixtures allowance @ $2500 (excluding 50 recessed cans referenced above).
6. Kitchen appliances to include: refrigerator, propane cooktop, double oven, microwave &
dishwasher (allowance amount @ $5700).
7. Kitchen cabinets allowance @ $7500.
8. Granite allowance for kitchen @ $2600.
9. Granite allowance for master bath and upstairs baths @ $2500.

  1. Allowance for plumbing fixtures for entire house @ $7000.
  2. Allowance for all bathroom cabinets @ $2500.
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I will be starting my new 2400 sf home in a few days and my kitchen appliances (Whirlpool Gold or Bosch Series 500) will run about $10,000.00 and kitchen cabinets with granite tops will run about $22,000.00. Your flooring allowance doesn't sound bad but the cabinets and appliance allowances sound really low on a 720k home...50 cans will go pretty quick too. appliance and kitchen cost are not builder allowances as this is a custom home and we are picking out what we want in the home.

This post was edited by LOTO on Wed, Dec 26, 12 at 20:58

    Bookmark   December 26, 2012 at 8:55PM
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Kitchen cabinets $7500? Umm dont think that will get you very far..

    Bookmark   December 26, 2012 at 8:59PM
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Your flooring allowance seems ok but I think your other allowances, esp cabinets and granite are pretty low.

    Bookmark   December 26, 2012 at 9:12PM
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Be very cautious with allowances, especially so many of them for unspecified or unselected items. Your list is really a very long list of items and expenses.

As described, if I understand your numbers correctly, your budget (so far) is $211/SF, which even in urbanized areas should buy a reasonably well built and finished house.

The problem with allowances is several-fold:

--Allowances are at the mercy (and completely in the interest and control) of the builder. Many builders may deliberately low-ball allowances so as to make the initial construction cost seem reasonable or at least bareable;

--When owners really find out what they may get for a given allowance they will often find the choice(s) unsatisfactory and opt for higher end, higher prices finishes, equipment, appliances, etc. Thus, strong owner discipline is essential;

--The only way to eliminate or minimize allowances (and to know what the true, full construction expense will be (short of change orders for errors, omissions, owner's deciding to change or enlarge something during construction that was previously approved, etc.) is simple: work with a design professional, like an architect, and have as much designed and specified in the final construction documents used for bidding as humanly possible. Unfortunately, many owners find it daunting, or for other reasons, choose not to make many of the choices before bidding and construction, with the result of a long list of allowances just waiting for expensive substitutions.

You really need to do your best, disciplined due diligence from here on out and stick with the allowances given if you hope to maintain budget control.

Good luck with your project.

    Bookmark   December 26, 2012 at 9:56PM
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Sophie Wheeler

Flooring will be doable if you don't want anything too special like a custom stain mix or natural stone or a mix of sizes and decorative listellos. In reality, for a custom home, it's really a bit low if you want something upscale.

The kitchen is completely unrealistic unless you're building something entry level. Triple the cabinet budget if you even want something lower mid grade. For true high end custom grade, you'll easily spend 5x on even a smaller kitchen. Appliances can be 10K, or you can spend 10K on a single built in refrigerator.

Your lighting budget is also ridiculously low. That's one single crystal chandelier for the dining room and you haven't even bought a single other light.

The plumbing fixtures are also very low. That's a single bath tub. Or, even a single toilet if you're looking at one of the specialty bidet seat concealed tank ones.

In the end, add in another 150k to the price of the home from these lowball allowances. That's bringing it up to a reasonable custom level.

    Bookmark   December 26, 2012 at 10:53PM
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Those allowances are a complete joke. The GC is trying to add ALLOT of profit during the build. Everything in the NE is union, cost 2-3x what it does in the SE.

    Bookmark   December 26, 2012 at 11:15PM
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1. Oak flooring in the entire home (except ceramic tile in the laundry room, master bath and
upstairs baths) - allowance @ $7.00/square foot. Even assuming the allowance is meant to cover materials only, there are far to many variables involved with hardwood flooring to decide if this allowance is appropriate or not. Will you be getting engineered wood or solid wood flooring? If engineered wood, how thick will the wear layer be If solid wood, how thick? In both cases, what width boards? And are you okay with your builder using lots and lots of short pieces? With solid wood, do you want it prefinished or site-finished? If site finished, does your allowance have to cover wood stain and polyurethane or other top coats? Then there is the question of exactly what $7/sq ft means? Typically you have to purchase about 10% extra wood. If you're putting hardwoods thru-out a 3400 sq ft house except for laundry and baths, I'm guessing you'll be covering about 3000 sq ft in hardwoods. Thus you'll probably need to buy 3300 sq ft of wood. Will your builder say $7/sq ft means you have a maximum allowance of $7x3000 or $21,000? If so, you'll actually only be able to spend $6.36/sq ft. Ultimately, once you start looking into it, you will probably find that it is easier to specify the exact flooring you want rather than leave this item as an allowance?

2. Flooring for finished portion of basement carpet or tile @ $3.50/square foot. For carpet, must the allowance stretch to cover padding as well as carpet? Must the tile allowance cover mastic and grout? And again, in both cases, you have to purchase extra material for wastage.

3. Tile allowances for materials only Master bath @ $5.50/square foot; additional baths @
$4.50/square foot. Do you specifically WANT to use different tile in the secondary baths? If not, why wind up with leftover tiles in two different styles?

4. 50 recessed can lights throughout the house. Be sure your contract specifies that all recessed cans that protrude into attic spaces MUST be ICAT rated (insulation contact air tight) lights. These are more expensive than non ICATs but Non ICAT recessed can lights are a significant source of heating/cooling loss. Bear in mind also that recessed can lights can be a real PITA to change when they are in 2 story vaulted ceilings or over a staircase where you can't easily put a ladder. Thus, you may not want 50 cans.

5. Lighting fixtures allowance @ $2500 (excluding 50 recessed cans referenced above). I spent slightly over $3K for the light fixtures and ceiling fans for my 3200 sq ft home HOWEVER I shopped very very judiciously, bought practically everything on sale, and apparently don't have high end tastes when it comes to lighting. Light fixture prices vary enormously! My dining room light fixture cost $140. A friend of mine spent something like $1800 on hers. I like mine better. LOL! I strongly suggest that you do a little online research. Find light fixtures that you can live with for the following areas and see what they cost. Front door light, foyer light(s), dining room chandelier, kitchen pendants, master bedroom light; master bath vanity light(s). By the time you've done that, you'll have a much better idea of how far $2500 will stretch for you.

6. Kitchen appliances to include: refrigerator, propane cooktop, double oven, microwave &
dishwasher (allowance amount @ $5700). Again research it. You know the quality you want in your appliances and you can get prices online. Don't forget you're going to need a vent for your cooktop. Those aren't cheap and I'll lay odds your builder will expect you to get that out of your allowance as well.

7. Kitchen cabinets allowance @ $7500. NO WAY. I don't think you can even get low end cabinets for a small kitchen for that. Take your kitchen plan to one of the big box hardware stores that sells stock cabinetry, pick out something you could live with and have them do a plan for you. My guess is that you'll find that their estimate comes in at twice that allowance amount if not more.

8. Granite allowance for kitchen @ $2600. How many sq ft of counter top will you have? That seems pretty low to me.

9. Granite allowance for master bath and upstairs baths @ $2500. It doesn't make sense to me that you would have nearly as much granite in your bathrooms (even counting a master bath plus 2 additional baths) as you would have in the kitchen. Why would the allowance for granite in the bathrooms be basically the same as for the kitchen?

  1. Allowance for plumbing fixtures for entire house @ $7000. Again, whether this will stretch depends on what kind of tastes you have and how carefully you shop. You can get a vanity sink for $40 or easily spend $400. You can get a faucet for $60 OR spend $600. Make a list of fixtures you need and do some online research.

  2. Allowance for all bathroom cabinets @ $2500. This number actually sounds about right to me...maybe even a little high. $1k for the master, $500 for the PR and each of the other baths.

    Bookmark   December 27, 2012 at 12:58AM
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All are low. Some are crazy low. A lot will depend if your expectation is for building a slightly upgraded builder grade home to a low mid range home. In that location, I'd have to say that you're probably talking barely above builder grade for a 3400 sq ft home costing 720K. This isn't anywhere close to even an upper mid range home price in the NE. In a lot of ways, $210 a square foot doesn't buy much of anything by the time the price of the land is factored into the picture. Certainly no 10K refrigerators would be chosen for a barely above builder grade home, so it's probably safe to say that given that parameter, maybe the allowances aren't so drastically under estimated as some would have it. They still won't likely be adequate given most homebuilder's tendencies to underprice and most customer's tendencies to want to upgrade everything.

    Bookmark   December 27, 2012 at 1:53AM
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We are going to spend over 5k on an ikea kitchen and putting the damn thing together ourselves if that gives you an idea of the kitchen you can get for 7500K- an ikea kitchen plus installation would have run us 6500... Our kitchen is not massive.

I am in the midst of appliance pricing. We are getting quite a few things from the sears outlet. The cheapest I am coming up with is about 6K before tax and that includes vent hood, double oven, gas cooktop, microwave, fridge, and washer and dryer (is washer and dryer included in appliances?) so it depends on your area. My house is not fancy by any means, I certainly would not expect to spend such a low about on appliances for the 750K house! That is a fancy pants house to me! lol.

    Bookmark   December 27, 2012 at 2:49AM
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Your allowances seem low for a home in that price range. We live in the southeast and spent more than your allowances and our home was a couple hundred thousand less than yours. I know the NE is higher priced than the SE, but the difference in the cost of your home vs the cost of my house is what I'd expect, but I would also expect your allowances to be more than what I paid on those items in my home.

    Bookmark   December 27, 2012 at 7:41AM
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Thanks for all the helpful advice from everyone. Please keep them coming. We just got these from the builder and have been doing some online research as most have suggested to see how realistic these allowances are, and our research also shows the same thing --these seem ridiculously low. We are still under negotiation on the house, and will probably ask for higher allowances from the builder. Thanks again.

    Bookmark   December 27, 2012 at 7:54AM
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I'd review this with the builder, with a very suspect attitude that s/he is of questionable integrity (and/or experience). This sounds like a multi-house development type of builder, low-balling things in the beginning and making a greater profit at the end.

If you get this feeling after your conversation, were it me, I'd be looking for another builder.

This is a good litmus test for both you and the builder, since right now is as good as it's going to get for costs. Once construction starts, it can only get more expensive!

    Bookmark   December 27, 2012 at 8:30AM
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second #4 of bevangel's post.
ICAT everywhere.

no mention of hvac system.
not an area to low bid or even
bid without load calculation.

what type insulation package?

seems to be a lot missing & a lot

best of luck.

    Bookmark   December 27, 2012 at 4:46PM
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Blue, those allowances are super low, especially on a house for that price. I am building in MA as we speak. Similar size house, 3600sqft 4bd 3bath. My wife and I interviewed 10+ contractors and ended up with someone who we couldn't be happier with. Please email me, I would love to give you some advice with the experiences that we have had so far and possibly steer you away from some the contractors who seemed to be gouging us in their bids. Shoot me an email at njjr AT (use the @ symbol and no spaces)

    Bookmark   December 28, 2012 at 9:57PM
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All Allowances should be clearly written for materials only (installation in base contract sum) so a brief description and quantity or unit price should be included.

It is pointless to comment on an allowance amount without knowing something about the level of quality and quantity of that work.

There is no reason for a residential construction project in NE to be union.

    Bookmark   December 29, 2012 at 7:41AM
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I've gotta agree that these are unrealistic. Just consider a bit of math:

Thinking about lights -- I have been on this subject lately. We know you have the four bedrooms. Let's say you also have a living room, dining room, study, kitchen (you'll want to light the work area and an eat-in table), and a laundry room. That's ten "areas" to light.

That gives you $250 per room for lighting. The lights I want for my kitchen are $335 each -- one for over the sink, one for over the table, and I'm debating whether I want one over island. Thus, I'd have shot the budget in that very first room. The bathrooms'll give you similar problems: You're going to need a good light/fan -- that's going to be $100-150 each, and you'll still need lighting over the vanity.

The flaws in my logic: I haven't lighted a single hallway or closet, nor have I lighted the outside of the house. And I suspect that in a 3000+ square foot house, you probably have more rooms than I've guessed; thus, your per-room amount is probably even lower.

$2500 simply won't do for your lights, even if your tastes are simple and inexpensive. That price'll get you little more than bare bulbs.

The same argument could be made for your granite:

Let's consider my moderate-sized kitchen, which is 12x12 with a 5' island. That's a 12' run of cabinetry, then a 7' run (because the corner was already calculated in the 12' run and the refrigerator takes up space). Adding in the island, I need 24' of granite x 2 foot deep. So I need 48' for a moderate-sized kitchen. And that doesn't give me an overhang for an eating spot at the bar.

That means I could choose a $52/square foot granite. I might manage that price for a small bathroom vanity -- if I'm shopping for little left-over pieces at a salvage store, which is a fine choice for a small space -- but for a whole kitchen? Not likely.

Your builder knows that you'll overshoot every one of these numbers. He's planning to "upcharge you".

    Bookmark   December 29, 2012 at 9:13AM
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You are correct. New England is expensive but I haven't been to many 3/4 of a million dollar homes with $5700 worth of appliances. What else are you getting? Builder grade doors? Forced hot air?

We are in the same boat, similar budget, and similar size house. We have spent 35k+ on cabnits and counters, 10k+ on plumbing fixtures (with a decent discount from a friend) and 25k+ on appliances. Plus we have an amazing Hvac system (carrier green speeds with hydro air back up) and many other great items throughout the house. Your bid seems like many of our first bids from the few big builders in RI/MA who plan on retiring off of one job.

    Bookmark   December 29, 2012 at 10:56AM
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S Lunsford

One thing I learned from our build and that our builder encouraged us to do before we finalized the contract was to actually go and pick out the finishes, appliances, etc that we may want to see if our allowances were in line with what we would actually want in our house.
You don't have to pick out what you actually will use but it should give you a good idea of what budget you need.

    Bookmark   December 29, 2012 at 11:38AM
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The OP's $2,500 lighting fixture allowance is for surface mounted fixtures (excluding installation) in addition to 50 recessed light fixtures and the OP might prefer table lamps to permanent fixtures in certain rooms so I see no reason to question the allowance.

There is no reason to avoid selecting the bath exhaust fans ahead of time so they would usually be in the base contract instead of the lighting fixture allowance.

As for the granite allowance, the allowance should be only for the finished counters delivered to the site and installation should be in the base contract. We don't know the quality level, thickness, edge treatment, backsplash, if the sink will be undermounted, if there are drain grooves, overhangs, etc.

    Bookmark   December 29, 2012 at 5:12PM
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All of your allowances are low. My granite for the entire house was $17000. My cabinets for the entire house $23,000. Two of my lighting fixtures cost your entire lighting allowance.

    Bookmark   December 29, 2012 at 9:39PM
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All Hands Working Carpenter

I would reiterate many thoughts previously mentioned.

Kitchen cabinet and Granite costs are low (unless you put IKEA cabinets) in. But 7500 doesn't include labor to put the IKEA cabinets together or install them.

Your flooring and tile costs are low too - remember that the prices you listed are just to buy the product, not install them. Even bigbox tile can be 2-15/tile (not a square foot). Figure 4-6+ sq/ft for install.

recessed cans - 45-65/piece - not installed figure another 100 to install per fixture

Your appliance costs wil easily be 10-15k. 3000 for dble ovens, 2900 for fridge, cooktop venting????, 1000 for dishwasher, 800 for micromave, 2000 for cooktop - these are like bigbox prices (not viking or subzero).

Below is a link that you might find helpful to figure retail construction costs:

Here is a link that might be useful: Home Construction costs by zip code

    Bookmark   December 30, 2012 at 12:42AM
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Hi all,

Thanks again for all the feedback, links and offers to discuss more. We are taking most of these allowance items as a negotiating starting point, but we wanted to confirm our suspicion that there will need to be a significant adjustment upward for us to move ahead with the project.

The builder is very reputable (not one of the dreaded multi-home builders!), but he is clearly attempting to maximize his profits, and we we viewing this as a first bid. The HVAC system will be geothermal, so that is driving the price up a bit. Our hope is to get allowances that are in line with a 700k New England home, which is certainly not top of the line, but also isn't the lowest level. Thanks again for all the help, and we welcome more feedback!

    Bookmark   December 30, 2012 at 7:53AM
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By definition, an Allowance is just a place holder to assist the Owner and the Contractor in preparing a contract. It is a cost estimate for work and/or materials that cannot be determined at the time that the contract is signed. In effect, it is a small "Cost Plus" contract with a budget price that is included in a Lump Sum contract.

In a Lump Sum contract the total Allowance amounts are included in the contractor's total cost which is multiplied by the contractor's OH&P to get the total project Lump Sum. Therefore, an Allowance must always have a price or budget amount listed in the contract.

Unfortunately some of the items in the OP's Allowances list do not have a total price listed so they do not qualify as Allowances. This will almost certainly lead to unnecessary confusion and conflict later.

Unit Prices belong elsewhere in the contract unless they are multiplied by the quantity and a total Allowance amount listed.

Material quantities without a price (like the 50 can lights) belong in the base contract sum unless a total Allowance amount is listed.

When an Owner buys the larger kitchen appliances they would appear in the contract as "supplied by Owner, installed by Contractor" and not included in the Allowances or the Lump Sum.

    Bookmark   December 30, 2012 at 8:35AM
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Sophie Wheeler

Yes, the allowances are low. But making them more realistic will result in the price of the home increasing. You don't get to increase the allowances and keep the overall price of the home the same. Something has to give, and that something is YOUR budget.

    Bookmark   December 30, 2012 at 7:31PM
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This is the simplest way to break down a Contract Sum in a Lump Sum contract:


3.1 Subject to additions and deductions in accordance with Article 10, the Contract Sum is:

3.2 For purposes of payment, the Contract Sum includes the following values related to portions of the Work:

Portion of the Work Value

3.3 Unit prices, if any, are as follows:

Item Units and Limitations Price per Unit

3.4 Allowances included in the Contract Sum, if any, are as follows:

Item Price

3.5 The Contract Sum is based upon the following alternatives, if any, which are described in the Contract Documents and hereby accepted by the Owner:

3.6 The Contract Sum shall include all items and services necessary for the proper execution and completion of the Work.

    Bookmark   December 30, 2012 at 8:15PM
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Obviously as everyone has said, the allowances are low but it must be balanced with your expectations.

I recently built a vacation home and our kitchen cabs were $4000 or so. This was not the cheapest either although it was pretty close. It is a 10x10 L shape basically although it is more like a U. The cabinet fronts are shaker style melamine. The drawers are the basic cheap style. There is a lazy susan and the uppers are 42 inches (you can go with 30 inches which are cheaper). So you can get by on $7500 kitchen cabs.

In most of the country a $720k build is a near mansion and so $7500 is a total joke for kitchen cabs. Our main house is 5000 sqft, $620k build and we have $23k in kitchen cabs and $38k in appliances. This is for painted, glazed, maple cabs with all the trimings, lots of drawers, double island etc.

But if in your area, $720k is just a basic house then your allowances are reasonable.

Please do the calcs and see if geothermal is worth it. You can build double walls at r-40 usually for less upfront and less operating costs. Geothermal sounds sexy and it really makes sense on an older house where increasing the insulation isn't practical. But when building new, it often isn't the best bang for buck.

We had 50 can allowance for our upper 4000 sqft. Didn't come close. It all depends what you like but we have 8 in kitchen, 6 in living room (never use 4 of them), 6 in bathrooms above showers and tubs. That is only 20 and really 4 of them we should have skipped. All hallways are surface mounts or small chandeliers but even if they weren't, that would be another 10. Every can to an attic space is heat loss even if they are ICAT.

    Bookmark   December 31, 2012 at 8:14AM
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When the Allowance items are actually bought and they are more expensive, the Contractor will raise the contract Sum by the additional cost which is usually marked up by his OH&P %.

Therefore, specifying in the contract the markup for extras (Overhead is sometimes omitted) and a price and adequate description for every Allowance item is more important than making the Allowance amounts accurate; you certainly don't want them to be higher than the actual buy-outs. If you think the amounts are inaccurate and there is not enough time to raise them, just raise your contingency budget to cover it. If your loan amount is affected you would need to deal with the Allowances now.

When the can lights are selected how will the contractor determine the appropriate cost difference if there is no Allowance amount for those materials in the contract? If the can lights are actually specified or there is a unit price for them in the electrician's proposal, then the fixtures don't belong in the Allowance section because they are already included in the base Contract Sum.

IMO the greater danger to you is from a poorly written contract rather than the accuracy of the Allowance amounts. Who will be reviewing this contract to insure the protection of your interests?

    Bookmark   December 31, 2012 at 8:48AM
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I'd strongly suggest that rather than allowances you specify exactly what you want and get a price up front for the finished product. It's a little more advance work, but allows you to proceed with a lot more certainty about the actual final costs and permits a more accurate comparison among bids from different contractors. Plenty of other decisions will pop up along the way, having as many as possible made in advance will make your life easier during the build.

    Bookmark   January 2, 2013 at 1:42PM
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Will someone please post a contract (with personal information crossed out) that shows an example of spelling out what you want in the house, etc...that protects the home owner? Doesn't need to be the whole thing, just looking to flesh out what is mentioned in this thread....

    Bookmark   January 6, 2013 at 12:32AM
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A construction contract should consist of an Agreement, General Conditions, Specifications, Drawings and any Addenda.

For a house the Agreement often contains the General Conditions (or Terms of the Contract) and the Specifications are often on the Drawings.

Unfortunately many homeowners give the GC an incomplete set of drawings and specifications and the GC responds with a Proposal on their letterhead describing in a general fashion the design elements and features and listing the unspecified items as Allowances. This process can create some serious misunderstandings and disappointments.

Sometimes the GC acts as the designer and the Owner and the GC will sign a Design-Build contract. This contract type can make it even more difficult to get a full set of design documents included in the contract.

The only way I know to protect an Owner is to produce a full set of design documents (Drawings and Specifications) for the GC to price and then to include the pricing information and the list of the design documents in a standard contract form for both parties to sign. Allowances are fine if they are for materials only and it is not possible to specify those materials before the contract is signed. Allowances should be approved by both parties and it is a good idea for them to be reviewed by the designer of the project or another knowledgable party.

    Bookmark   January 6, 2013 at 8:05AM
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We are also building in RI. I am curious if your 720K figure includes the cost of land or is that solely for the construction of the home? Our initial allowances were very similar and we had to research and select many of the finishes before we signed our contract so we would know if the allowances were correct. We ended up paying for our appliances out of pocket. I can tell you our Thermador oven/range alone was more than the entire allowance you were quoted, but really it depends what you want.
My guess is your granite and plumbing fixture allowances are fine. We rolled the hardwood floors into the contract so we did not have an allowance for it. I would love to go over all of it with you if you want to email me. We started to build last month...we also chose geothermal for heating and cooling.

    Bookmark   January 6, 2013 at 11:08PM
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I have been lurking around this site for a while, as we are building a new home in suburban Chicago. I am posting because we are building a very similarly sized home (3400 sf), with about a month to go. We spent 300k on our lot (tear down), and have about 500k in build cost.

Our allowances were based on an exhibit the builder originally supplied, which we benchmarked against another house he had already built. I, like many others here, find your allowances to be alarmingly low. Our home is relatively upscale, but for what it's worth, our kitchen cabinetry allowance was 23k, with another 7k for the cabinets in the bathrooms and laundry room. Those are direct from the factory prices from a cabinet company 2 hours away (middle of nowhere) with no retail markup at all.

Your flooring allowances look fine to me - our 4" site finished white oak flooring costs my builder $7 installed, and the carpet is fine too. Keep in mind that moving from ceramic to marble will probably be in the $7-10/sf range, with a likely up charge on the install too (if you're thinking of going that way).

We have $15k in appliances in our kitchen, with a 36" wolf range and 42" subzero at builder discount pricing, plus a typical dishwasher, vent hood and microwave.

We spent over $5k in lighting, but went higher end than you need to. I think we had to pick out something like 50 fixtures for our house, so while some will be cheapies in the closets, it adds up quickly.

To me,the most important thing to do is walk one of his houses and ask what was spent. How much were the cabinets in this house? How much was the granite in this house? Etc... That will give you an idea how reasonable things are or aren't. I certainly hope your 720k includes the land, but regardless, you will want to get the allowances straightened out up's much easier that way...

    Bookmark   January 7, 2013 at 9:14PM
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As with other responses, i'm wondering if the 720k includes the cost of land.

I'm building a similar house in California (3200 main floor, 1000 sq ft bonus space) for about the same budget for the build only, land being seperate. Below are my allowances, and I've done a fair bit of research to ensure I can get what I want for these numbers.

1. Oak flooring - We have the same budget. We are likely buying 4' or 5' unfinished oak installed and having it finished on site. We may change that and buy solide prefnished for about $5/sq ft and have it installed ($2/sq ft for instal)
2. Flooring for finished portion of basement - we have a large bonus room, Carpet allowance is $3/sq ft
3. Our tile allowance is similar
4. Can lights - This is included in the overall electrical budget so I don't the exact amount.
5. Lighting fixtures allowance: $5000 (excluding recessed cans, undercounter lighting.
6. Kitchen appliances allowance - $17,000 (Bosch dishwashers x2, induction stove top, double ovens, samsung fridge, Sharp drawer microwave, and unkown brand of hood) The actually price of these items is quite a bit higher - but bosch has some amazing rebates right now
7. Kitchen cabinets allowance: Whole house: $31,000
8. Granite allowance for kitchen: not sure of this one since it is looped in with instal
9. Granite allowance for master bath and upstairs baths:not sure of this one since it is looped in with instal

  1. Allowance for plumbing fixtures for entire house: $8500 (four bathrooms & kitchen)
  2. Allowance for all bathroom cabinets: see whole price amount above
    Bookmark   January 9, 2013 at 4:12PM
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The OP said the allowances were for a "720K house" that will be new construction so the only costs beyond the construction of the house might be paving and other site improvements and possibly a septic system and/or a well.

    Bookmark   January 10, 2013 at 7:09AM
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Renovator - I agree that is how I would word it but people don't always get that. When you are building in a development, they often wrap the land into that.

    Bookmark   January 10, 2013 at 7:12AM
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Sophie Wheeler

They actually want an 820K house, at a 720K house price. They don't really want a 720K house. And the builder has based the allowances off of a 220K house.

    Bookmark   January 10, 2013 at 7:41AM
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This problem usually arises when an Owner relies on a Builder to design their house and write the construction contract. This forces the Owner to accept the Builder's design and documentation as well as the final price (or go elsewhere and start all over again) thereby losing price control. An allowance represents the ultimate loss of price control by an Owner for a particular portion of the work.

Most of my clients want to bid their project so they hire me to design and document the project, write the contract and set the Allowance amounts so all bidders will be pricing the same scope of work. Of course, I take that opportunity to design and document as much as possible and minimize allowances. Typically there will only be one or two allowance items for materials only.

    Bookmark   January 10, 2013 at 5:22PM
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This is taking the thread slightly askew - but how can you design a house that only leaves room for one or two allowance items?

    Bookmark   January 10, 2013 at 5:33PM
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There is nothing in a house that cannot be designed, selected and/or specified before signing the construction contract but if an Owner wishes to postpone the selection of certain materials it is possible to specify something that will establish the quantity and quality so that it can be competitively bid and revised later if necessary. Tile is a special case where a unit price is preferable to an allowance but the installation method should be specified and the labor included in the base contract.

An allowance is like a small Cost Plus contract within a Lump Sum contract but it doesn't have the usual cost controls that a Cost Plus contract would have. Often a sub has already been selected limiting the Owner's choices and there is little room for negotiation as there would be in a true Cost Plus process.

    Bookmark   January 10, 2013 at 9:54PM
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I ask because I just can't imagine having had to make all the decisions required before sending out our house for bid, and we just spent 5 month designing our house with a professional, and 7 months before that researching ideas and options on my own! That said, I used a standard set of allowances to compare bids to ensure I was comparing apples and apples.

    Bookmark   January 10, 2013 at 10:17PM
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In the list the OP posted and the description Bevangel provided, the only Allowances needed are for the material for counters and cabinets.

The Unit Prices for tile and flooring are useful but they are not Allowances; an allowance must be a total price so it can be aded to the contract price and you don't want to be telling the contractor how much material to order. Describe the kind of finish and the installation method and put the Unit Prices in the appropriate place in the contract.

Appliances are usually bought by the Owner and installed by the Contractor. You can often get a better price through your designer or on your own than from your contractor.

Recessed lighting and switches should be shown on a lighting plan and the housings and lamps (bulbs) specified in the fixture schedule. This determines the correct number of fixtures and the number of dimmers and the correct lamps so you don't get cheap inefficient R lamps in all of the cans. There is no mystery about insulated and air sealed housings, it's all in the building code and your designer will be modify a schedule from a previous project. "Other lighting fixtures" are usually bought by the Owner and installed by the Contractor unless you want the electrician to help you choose them.

Plumbing fixtures and fittings should be selected and specified in the base bid even if you are still thinking about them; they can be changed later. There are only a few that look good and work well and your designer should know them well.

Make your designer earn his/her fee and enjoy the construction process instead of worrying about the contractor getting ahead of your decision process. Save your emotional energy for the problems and that inevitably arise in construction and use a complete set of documents to help protect yourself from them.

    Bookmark   January 11, 2013 at 6:59AM
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I see your point, but I wasn't ready to make all those decisions during the design phase, and also the designer that did my plans doesn't get involved in all of those decisions either. In my area I simply couldn't afford an architect, but I did go with a reputable design firm who has worked with the builder I ended up selecting on many homes so I was in good hands. They do get involved in the selection of materials for the exterior, but not at all for the interior - and I knew that going in so it wasn't a problem.

I am now enjoying the time between having the contract signed with the builder and my loan getting funded to pick out all the items I need. What was important in advance was that I had a very good idea of what all the allowance items I wanted would cost, and that I am finically prepared for any overages. I�m not at this point going to pick out a subzero and ruin my budget that way, but I know I may add a couple thousand to tile budget or hardwood flooring and I budgeted in advance to have the cash on hand to pay for those items if needed.

    Bookmark   January 11, 2013 at 2:33PM
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Well my jaw hit the floor when I read the allowances for that price of home. We built 14 yrs ago, here at the end of the world in a small town in WV. We built a 3600 SF house in 1998, and we spent more on lighting back then than the allowance you have now (about 3K I think) . Our house cost $200K back then. We are currently remodeling and have spent $11000 on cabinets that are a middle-of-the-road brand and $8000 on granite. Granted the cost of housing in this town is no where near the cost in New England - but still! A particular cabinet brand does not vary the much across the country. Thomasville at Home Depot is pretty much the same everywhere. Now the cost of custom will vary for sure. BUT, appliances don't vary region to region either.

So, what the heck is costing so much? Is it an all brick home? What kind of roofing? Is there a long paved driveway with a big pad, lots of walks etc? Will you have fireplaces and real chimneys? (as opposed to what I call "fake" fireplaces) A full basement? 10-ft ceilings? I think these are the things that can drive up the cost of a home before you even start on all the stuff inside you are given allowances for. But I thought most contractors based their allowances on the percentage of the total cost, so I don't know. I just know that that in these parts, where rarely anyone spends that much money on a home, the average person would spend way more than your allowance on cabinets/appliances/lighting.

    Bookmark   January 12, 2013 at 11:10PM
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Well, the OP seems to have dropped of this post, however I can speak for my cost to build. In general materials for construction have gone up faster than inflation, partly because of transportation costs being tied to oil prices, partly because of lumbar disputes with Canada, and probably, partly because they can!

In my area, California the building codes have also become ridiculously stringent in recent years and that has added quite a bit of costs.

For our house we are paying over $80,000 for the foundation, $30,000 for the roof (Eagle concrete tile), $20,000 for utilities, $12,500 for septic, $20,000 for the various engineering requirements (soil, civil & structural) and close to $20,000 in permits and impact fees. Just those costs alone add up to nearly the costs of the house you built 15 years ago.

In another state I could have built a more reasonable foundation for 1/2 the cost, the utility would connect me for free, engineers would charge 1/2 the rate, and the permits and fees would be a very small percentage of what I'm paying. Right there nearly $100,000 would be knocked off of my costs.

Great weather is expensive!

    Bookmark   January 13, 2013 at 11:36AM
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Thanks again for the feedback, it has been very helpful. Based on all of the feedback and lots of research into what we want and how much it will cost, we were able to get the builder to go up significantly on the allowances. We feel like we are in a good place and will be able to get what we want. Thanks again! I'm sure we will be back with questions about so much more!

    Bookmark   January 26, 2013 at 1:44PM
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Why aren't you doing as suggested and pick exact product instead of allowances so you eliminate the guess work?

    Bookmark   January 26, 2013 at 3:49PM
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I hope your builder broke down the allowance information better than the list you provided. Allowances are for the total of each item, labor and material. If you exceed the allowance, you will pay the difference and probably the standard 20% profit and overhead also. In most states a builder must show that he can actually complete the job for the amount of the allowances. It also appears that the plumbing and electric fixtures are coming out of your other allowances.

One organization recommends spending between 5% and 15% of the the total value of your home on the kitchen. 8% is the average. Spending too little may reduce the resale value, spending too much doesn't always increase the value.

The entire kitchen project (including cabinets,plumbing fixtures, appliances, Countertops, flooring, lighting, trim molding, & wall coverings) should cost no less than 5% and no more than 15% of the current value of your home with approximately 50% of the total cost allocated for cabinets (including accessories and trim)

Based on minimum of 5% the allowance for a $720,000 home would be $36,000, but the more appropriate 8% average would be a $57,000 allowance. These figures include labor. A high end kitchen with commercial appliances and more area should not exceed 20% of home value.

In addition to allowances, any changes you make after the contract is signed can be expensive. Try to get a fixed price for extra outlets, dimmers, or anything else you can think of. A simple outlet for a computer could cost a few hundred dollars.

Unless otherwise noted the labor cost is deducted from the allowance

    Bookmark   February 10, 2013 at 12:05AM
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The buyout of an Allowance item usually involves prices from subcontractors. A GC will usually collect prices from one or more subs and present them to the Owner with no obligation to break the prices down into material, labor and OH&P or to allow the Owner to request different subs. Writing the contract to allow the Owner more cost control (as in a Cost Plus contract) is complicated and rarely done.

This procedure opens the Owner up to cost overruns from excessive labor charges and "sweetheart" deals between the GC and a sub. This can happen even with reputable GC's who think it is an acceptable way of doing business.

Therefore, it is essential that the Owner provide drawings to the GC that establish the quantities of the Allowance items even if it is just a guess. In other words the installation labor for an Allowance should be in the base contract price not in the Allowance amount or there should at least be Unit Prices provided in the contract for that work.

    Bookmark   February 10, 2013 at 7:55AM
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