If you’re undertaking a home remodeling or construction project, you should have a clear understanding of what contract allowances mean, and how they can affect the overall cost of your home remodeling project.

So What Are Home Improvement Allowances?

An allowance in your home improvement contract is essentially a budget set aside for particular items or work. Most contractors use allowances for items that the homeowner needs to select, such as plumbing fixtures, appliances, granite slabs, tile, door hardware, etc. Fixtures and materials have wide range of cost depending on quality, availability, etc., making it nearly impossible to accurately predict and include in the contract bid. The only way to know if the allowances will cover your taste or level of quality is to go out shopping.

Another thing to keep in mind is that your choice of finish or fixture may impact the installation cost. For example, you might choose tile with a more labor-intensive pattern or a built-in refrigerator that has special installation requirements. Identify these conditions up front to avoid change orders in the field. It’s common for contractors to understate allowances during the bidding process because it makes their price more attractive and they can close more sales. To protect yourself from cost overruns, ask for a list of allowances and vendor showrooms so you can make selections and see if the numbers are reasonable. If you already know what level of finishes and/or fixtures you want to use, make sure the contractor plugs in the appropriate allowance. Never assume their number is correct.

image of steel faucet with running water

You may also consider purchasing some of the fixtures or finishes on your own and ask the contractor to handle the installation. Once again, make sure the builder knows what you’re providing to ensure there won’t be any additional labor costs.

Before you choose the contractor with the lowest bid, do your homework and take a close look at the allowances. Knowing what home improvement contract allowances are could save you thousands of dollars!

Need more guidance in finding, vetting, and selecting the best remodeling contractor for your project? Download our complete guide to choosing a home remodeling contractor here: Get Your Guide

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