Understanding Those Allowances in Your Remodeling Proposal

Understanding Those Allowances in Your Remodeling Proposal

You may be frustrated (or at the very least confused) by the allowances referenced in your remodeling proposal. And while the horror stories about how and why contractors include them can unfortunately be true, there are also legitimate reasons for their use.

An allowance is a monetary value attached to an item of work in a new or remodeled home that serves as an average for budgeting purposes. So, for example, if your proposal indicates an allowance of $3,000 for light fixtures, your actual cost will almost certainly come in above or below that figure based upon the actual fixtures you choose, but $3,000 is your contractor’s estimate.

Honest contractors will provide you with allowances that are reasonable based on the location and value of your home and the other types of materials you’ve chosen. These allowances allow you to get a feel for the price of your project without having to solidify every decision upfront. Not-so-honest contractors, however, can overuse “lowball” allowances to make their proposals appear more competitive.

How can you guard against allowances that come back to haunt you?

  1. Choose a contractor that you trust completely. More than any other suggestion, this is the best way to ensure a satisfying outcome.
  2. Do some investigating before your contractor finalizes the proposal. If you’ve found a rare marble tile that you simply must have on your bathroom vanity—tell your contractor so that the price makes it into the proposal.
  3. Communicate about budget throughout the project. It’s easy to upgrade a few things here and there and then be shocked at the overages at the end of the project.
  4. If you know your tastes lean toward the more extravagant, ask your contractor to build this into allowances.
  5. Ask questions about how allowances are calculated and what they include.
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