Buying allowance items

19 years ago

I'm curious if anyone has any experience with purchasing items that were budgeted as allowances in your fixed price contracts?

For example, we already purchased our kitchen sink (assume $300). We have a 10K plumbing allowance. We have yet to clarify with the builder exactly how this is going to be handled.

Do most builders reimburse you directly for anything purchased directly by you? When we initially discussed this with our builder he said that they would just write us a check for any money we spend. So they'd write us a check for $300, and the remaining allowance would be $9700 and we'd have to hope the remaining plumbing work would be covered by that amount? We just have to hope the plumber/builder is honest and doesn't make up charges to cover the lost sale of the sink?

I know many will say "what does your contract say", this is what it says:

"14. Allowances. Allowances built into Purchase Price are specified in Exhibit "A" attached hereto and incorporated herein. The Allowances provided are estimates of the pure cost of materials and labor requested by Buyer. In the event the actual cost of materials and labor is greater than the estimated cost as provided in the Allowance, Builder shall be entitled to the difference as an increase in Final Payment. In the event the actual cost of materials and labor is less than the estimated cost as provided in the Allowance or Buyer purchases a portion of the materials falling under Allowances themselves, Buyer shall be entitled to the difference as a decrease in Final Payment."

Any experiences anyone would like to share is appreciated.

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Comments (5)

lyfia
19 years ago
Reading your contract it looks like you don't even need to claim the sink. Keep the allowance as is if you need to use all of it and if not whatever is left over you will get re-imbursed. That is unless you really need the $300 back from that allowance, then I'm sure you could just ask for a check.
cork2win
Original Author
19 years ago
Gee, that seems really simple. LOL. Thanks!

I hadn't thought about that. I guess I'm questioning if it's going to be worthwhile for us to buy stuff outside of the contract (will we see a true decrease in the plumber's costs as a result of us providing some of the materials?). Not sure if anyone can really answer that though...
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lindybarts
19 years ago
We bought a few things outside the contract but it was much simpler just to stay with the builder's accounts. If we purchased something ourselves, we would get a credit back but the accounting is a little messy that way.
kelntx
19 years ago
We have a bought a few light fixtures at Lowes that were on clearance and the builder said that was fine. I do see how it would make it easier on his/her accounts to go through where they have accounts set up. Plus after talking with the builder we are able to get a much better selection and at better prices (in most cases) then if we just went to Home Depot of Lowes. I couldn't pass up the two fixtures though! LOL! When they are that cheap and it is what I have always wanted...I'm getting them! LOL! The builder said he will just either write us a check or credit the amount we spent towards the fixture allowance.

Good luck!!
sniffdog
19 years ago
cork2

our contract is exactly as you described - almost 30% of the price are allowance items and we have similar terms.

if you purchase items - and we did the same thing with stainless sinks - then the builder won't have to order those sinks and the builder costs for plumbing fixtures will be lower. you would coordinate this purchase with the builder so they know what you are going and you don't have double ordering.

when you look at the whole house project - on some allowances you will be under, some over. More than likely it will be you writing a check to the builder at the end when all allowance items are tallied.

I definately recommend looking for deals but to be selective - only buy items where the savings is worth your time and energy. The sinks are a great example - we saved thousands by purchasing top quality stainless sinks based on a recommendation we got off GW. We could have saved a few percent off of all plumbing fixtures if we purchased items though many web sites - looking for the best deals. In the end - we figured that would be a nightmare to manage so we used the builders plumbing supply house for most of the items where there wasn't much to be saved.

Mirrors, bathroom accessories, cabinet handles are other types of items we are providing ourselves since we found deals on items we really liked that are not carried by our builder's suppliers.