Yep, we went over too, but not too much over..... We were able to get a lot of things we wanted within the allowances except for appliances - ~$3grand over (that's a given!) & we went $500 over on lighting. We haven't gone over the top w/ much of anything, but it will be a really nice house. Hardwood floors through out except for the bedrooms, ceramic tile in the wet areas, granite kitchen counter tops & nice (but not custom) cabs, central vac. We're happy because a lot of things are better than the apt. we've been living in for the last 4yrs. We're blessed & we're thankfully going from an 1100 sq. ft. apt. to a nicely laid out home in a very nice, wooded neighborhood w/ several bells & whistles.!

I am sorry to hear about your problem. Is every item too low? Granite varies horribly. While your GC might of known that you wanted granite slabs, he may be less familiar with the cost of the colors you have in mind.

I suppose your options now are to go over budget or settle for builder's grade.

Since you can't get more than your money will buy, I would remember that if he would of bid the real figure, you would of probably had to cut something. Perhaps now is the time to start looking at places to tighten and also to let out your belt.

$12,000 over on cabinets without upgrades???? That is crazy. Sounds like the contract was not specific enough.

We have gone over on items by choice but not by necessity. The builder grade would have been fine but when given options, of course, I want the prettier more expensive stuff on most items. :) Who wouldn't, right?

I'm sorry you are going through this.

OH BTW - granite, tile and more than $12,000 in cabinets sounds pretty luxury to me. Enjoy!

"But why is it that contractors always seem to low ball the allowances?"

The explanation I've heard from them is that when they're involved in competitive bidding, they are competing with the other builders to get your business. If they bid realistically, and are one of the higher bidders, they will not get the job (most times). So, they present what they hope will be one of the lower bids. And then you have to live with their marketing strategy.

So, it's buyer beware. Means we have to go out and price everything ourselves while we're comparing bids. I, for one, will never go through this again. It's just way too much work and agony. We all feel your pain.

Here's one thought, though: You are actually in the same position as to your selections as you would have been had you gotten a contract that correctly reflected the prices of what you want. Right? You would simply have known earlier that what you want will cost you more. So, if you can afford what you want, why let the builder's marketing ploy stand in your way? You can still get what you want, assuming you can find the cash or get more $ from the bank. Is that doable for you? If not, you're just gonna stay mad at the builder and you won't get what you want.

An allowance is simply a guess on the part of the builder so there is no way to make him be more accurate with contract language.

I don't know why contractors are so reluctant to aim higher with allowances but I have found it to be true most of the time. Perhaps they pick up the habit when doing competitive bidding.

One way to deal with it is to only have allowances for materials and not installation. This means you must determine the scope of all allowance work well enough so that the installation can be included in the base price. Another way is to ask for a high and low range for the allowances and then the owner chooses the actual amount to be included in the contract price. It also makes it easier to check the allowance amount through the internet or suppliers.

An allowance is really just a budget and budgets should be monitored by the owners not just by the contractor.

You can cut down the overages by making as many selections as you can prior to signing the contract - and adjusting the allowances. Then it is up to you to stay within that budget.

However - some allowance items are very hard to predict ahead of time (excavation is one of those - no way to know exactly how much rock you will hit).

Our builder low balled the estimates to keep the house price down to land the deal. We knew that ahead of time - so we adjusted allowances and then made sure we had plenty of cash to deal with any other surprises that popped up. 10 to 20% overruns are not unusual in custom built homes.

It is very frustrating and it is very common.

We saw our allowances for what they truly were: a good start;-) Really, I was upset at first, then we came to terms with it. Pay for it out of pocket or pay for it for 30 years, it's your choice. You can talk to the bank to see if you have extra wiggle room in your loan and work in some allowance money that way. You can look for alternative ways to obtain the allowanced materials (scratch and dent stores for appliances, connections through friends and family, the barter system...only half joking there!) You can pick and choose what you can live with now and change out later.

All kidding aside, I was way bent out of shape for a long time, and decided to get over it. It is so very frustrating when you trust the person who has "been doing this for 30 years, stick with my people and you'll be fine...." etc. etc. to find out he didn't really have "people" and I was so very much on my own to chase my flooring and such. So I am really sympathetic.

Oh, and we did manage to reason with him and he raised my cabinet allowance and my flooring, because they were wayyyy too low for the size house we're building. We chalked it up to bad communication and went from there. Good luck, I remember clearly the feeling in the pit of my stomach when we were worrying over the same things.

This might be a stupid question. If I can find a deal on tile or whatever, am I responsible for trying to find an installer? Or do I just tell my builder, "here's the stuff, you put it in"? Because I can certainly do that! I am a bargain shopper by nature, but felt like I needed to use GC's suppliers whenever possible.

Charliedawg-you're right, it all feels like great luxury to me. I am so blessed! I'm trying to remember that everyday!

BTW-the cabinet thing was just a mistake on GC's part. I'm not sure what happened. He had the plans and everything. We didn't add anything to the cabinets. He just had a brainfart and "forgot" alot of the built-ins I guess!
And on my part, I was unaware at the great variances in granite prices. I knew that if it was "over the top" it would be expensive, but I guess what I thought was just regular granite (like most juparanas, for instance) is considered a little more rare than others.

Must you use the builder's usual suppliers? Also, will the builder apply unused funds from one area (tile, for example) to another (cabinets)? If you're not completely tied to his suppliers, maybe you can save money on some items by purchasing them elsewhere (including online.) Not all builders will go for it, but we were able to do that on two houses.

In one case, the glass mosaic tiles that I found online cost 75% less, even with S&H, than the local tile stores' prices. We also made lighting purchases for two houses that saved about half compared to the builders' suppliers. Dh didn't think it was much of a savings at first, but $1K here and $2k there do add up after a while.

If you cannot buy elsewhere, another idea is to go low cost on any easily replaced finishes and budget to upgrade them later. The site supervisor for one production builder house told us that a neighbor had them install only bare bulb fixtures (the sort they usually put in the attic) with the intent to replace them after closing. The $2K+ remainder of the lighting allowance was applied to their flooring. Another neighbor went with a stone look laminate counter (Honed Travertine) and will replace it with granite once their kids are out of college.

Sorry about the frustrating trip. Hope you find a satisfactory solution soon.

superchick, we have negotiated our way through everything. One thing of many that I have learned through all of this is never assume anything. Ask your gc if you find a great deal on tile, does he have someone who will install it? Also, if you get great deals on appliances, do they include delivery and installation? (Ours didn't, but our gc said he would take care of having someone there to install it if we took care of getting the appliances there. Of course, the CO will not be granted unless the appliances are working, so he's really covering his own assets)

Some gc's will charge more if you upgrade. For example, good friend's of ours have been in their new house about a year, and she sat me down to give me some pointers. Her gc charged them 18% on all upgrades, including allowanced items. So that was an additional 18% on top of everything else regarding that particular item. Our gc did not charge us anything when we went over on our allowanced items. After that, on upgrades and some but not all changes it was either nothing, or 10% for overhead, or 10% for overhead and 10% for profit. It depended on the item, the amount of extra work that was involved, etc. Again, we negotiated that number down to 0 on some things, and some we paid. It is a system that my gc and my DH have devised between the two of them, because they work well together and most discussions re: money take place over a beer. Fine with me, I just write the checks!

My point, and I do have one, is not to leave any questions unasked, I don't want you to be surprised with a profit and overhead percentage that you didn't expect.

Good luck,

Amy

superchick- your contract should address all of the questions that you've asked. Your contract should discuss whether your tile allowance is for "materials only" or for "materials + installation." Based on the allowance of $2.50/ft for tile, I am going to make the assumption that it is materials only b/c you would be about $10/ft MINIMUM over your allowance otherwise.

I don't really feel that someone not being able to stay within the allowance caps is the GC's issue. They have to low ball to some extent to get the work. Negotiating allowance amounts that correspond with your particular tastes/needs/wants is the homeowner's responsibility. A quick trip to a flooring store prior to signing a contract would have made it abundantly clear that your allowance was too low for your tastes. If you're doing a cost-plus build, then bj is right...the allowances were always meaningless. If it is fixed price, then more work was needed upfront.

I know it is frustrating when you thought you explained your wants to the GC upfront, but that's another reason why it is so important to have a good contract. There is no reason why someone in the middle of a build should have to ask "If I can find a deal on tile or whatever, am I responsible for trying to find an installer?"

Someone building a house should know all of the points brought up above, ie...you should know if you can use remaining allowance amounts in one category for another, you should know if installation is included for tile/hardwood/carpeting. These should not be questions to ask your builder after you sign a contract! They need to be negotiated upfront.

superchick: Can you read your contract and find the answers to your questions, such as what is included within an allowance (ie, materials or materials + labor)? If you can't understand the language do you have someone who can help you with it?

Dixiedoodle and some others posting here have made good points about what you should have done or might have done differently. But what do you do now? You can read your contract (or get someone who understands contracts to tell you what it says) or you can ask your builder and hope he tells you the truth, the whole truth, about your options. (Nice guy, fine, but this is the guy who bid your house too low.) At the very least, when you are calm and not in a frustrated mood, talk with your builder about the entire situation and how it can be remedied now.

Otherwise, you're gonna just go into a major pout like a kid whose parent just took their candy away. No future in that.

superchick-
You are correct. Generally, that is how the allownces work. The builders quote you the bottom, contractors quality stuff. Upgrades are extra.
This way there are competative & they know what the house will cost them. Only the million dollar homebuilders will include upgrades. Although my sister went to an Open House which was 3.5 mil & that house had some Home depot stuff in it. She couldn't believe her eyes.

Most of the time the installation is included when you have an allowance of $2.50 sqft tile. Ask if he'll charge you more if you want your tile installed fancier than just plain squares. Usually, if there are inserts or diagnal installs the tile person charges more.

If you're building custom, figure an extra 15% for mid-range upgrades.

It is no big secret builders low ball the allowances to get the job. People only see the big number on the bottom line and no matter how much you try and enplane that your price includes every thing they wanted. They will go with the cheaper number. Then cry when they go over budget because there allowance was for half what it really cost.

Okay, today is a new day. Thank goodness! After thinking about it all afternoon, I've decided that maybe I'll just opt for a less expensive granite, after all, that is what perpetuated this whole outcry of mine in the first place...
It's certainly not the end of the world if I don't get the exact granite I wanted!

I know what everyone has said is true, and I knew it all to begin with-that we'd go over budget, that most allowances wouldn't be enough, etc. And if the cabinet thing hadn't happened, all of this would be a non-issue. The overages on the cabinet just really took a huge chunk of our "extra $". I think I must just be stressed over all the decisions. I'm beginning to second guess every one I've made so far. Then when I do make one and I feel good about it, the budget makes me go back and do it all again! Oh, well, I signed up for this ride, huh? I'll just count my blessings and go on...

THANKS everyone!

I doubled most of our allowances to begin with. The problem I had was also cabinets, from a good friend who did all the design work. When I told her my allowance price, she said that would be enough to purchase her line of cabinets according to the design she created for our kitchen and baths.
Not so, it was TWICE the price. I still can't get over that...
Ended up with kraftmaid, costing a little over $12,000 total.

How does low balling win contracts? Why would an owner not remove the allowance amounts from the total bid when comparing competitive bids?

This is not germane to the actual subject - but mightyanvil, I think you need to back down and lower your expectations of the 'average' person who is building a home via GC. The proper way as you know is to back out all the variable items and compare base cost to build the house (apples to apples for lack of a better term). But I would guess that many individuals don't know how to do that, fail to do that, or just don't realize to do that when signing possibly the largest ticket item in their life. . .

So, that being said, GC's know that if they 'low ball' the total cost to build by skimping on allowance items, potential clients usually don't back out those line items to arrive at the fixed portion of the contract. Most look at the bottom dollar cost and assume that it was priced with some sort of 'comparable finish quality' - which inevitably is always different between builder and homeowner.

Or put more simply - without the help of a professional (read: architect) to compare bids on building a house, low-balling will win a lot of GC's a lot of projects. ..