Early in the design process, your builder should work with you to create an estimated line-item budget for your home. Each item (landscaping, appliances, flooring, etc.) should be listed with a corresponding dollar amount (allowance). The line-item budget should make sense to you, and the numbers should be in line with the caliber of work you have seen in other homes the builder has completed.
An allowance can be your friend, or it can be your worst enemy! Good, honest, quality builders may lose jobs to the competition who do not give adequate allowances. Many builders will establish low allowances that are insufficient to build the home with the quality expected. It is important to establish realistic allowances that truly reflect the scope of the entire job.
Inadequate allowances are established by builders because selections are not always made prior to the commencement of building a new home. If a builder provides an estimate for a new home purposely or unknowingly lists allowances that are not sufficient for the quality expected, the initial bid can be thousands, if not tens of thousands, less than an honest builder’s proposal. Be wary of a budget that seems too good to be true.
The last thing anyone needs is to be in the middle of construction with insufficient allowances to complete the home. A good, quality builder will put a lot of effort into listening to what a homeowner values and then designing a complete home package to meet those needs. He will try to establish budgets (allowances) that allow the homeowners to select items that are in line with the level of quality they want for their home.