7 Thoughts on I am in the process of buying a home. Can someone please explain a how a “flooring allowance” works?
  1. Reply
    katiebeth79
    August 10, 2011 at 5:05 am

    An allowance is a term used to describe an allocation of money from one person to another.

    In construction, an allowance is an amount specified and included in the construction contract (or specifications) for a certain item of work (e.g., appliances, lighting, etc.) whose details are not yet determined at the time of contracting. Typically: 1) the allowance amount covers the cost of the contractor’s material/equipment delivered to the project plus all taxes less any trade discounts to which the contractor may be entitled with respect to the item of work; 2) the contractor’s costs for labor (installation), overhead, profit and other expenses with respect to the allowance item are included in the base contract amount but not in the allowance amount; and 3) if the section 1 costs for the item of work are higher (or lower) than the allowance amount, the base contract amount should be increased (decreased) by the difference in the two amounts and by the change (if any) to the contractor’s costs under section 2. The allowance provisions may be handled otherwise in the contract: e.g., the flooring allowance may state that installation costs are part of the allowance. The contractor may be required to produce records of the original takeoff or estimate of the section 2 costs for each allowance item. Other issues that should be considered in the contract’s allowance provision are: a) may the client insist that the contractor use whomever the client wishes to do the allowance work?; and b) may the contractor charge the client back for any costs arising from a delay by the client (or client’s agent) in selecting the material or equipment of the allowance in question?

  2. Reply
    ltlrthquakes
    August 10, 2011 at 5:06 am

    a flooring allowance is just money you can use towards the cost of redoing the floor – be it tile, carpeting, hardwood, laminate… whatever your preference. Sometimes you can pick it out and have it installed prior to closing (with you paying the difference between the allowance and what you want) – others will just give you the money at closing for you to do with what you wish. Ask your realtor for more information – that’s what you are paying them for!

    Congrats on the new house.

  3. Reply
    Miss V
    August 10, 2011 at 6:03 am

    In new construction the Builder is allowing you a certain amount of the purchase for floor covering. The least expensive choices are tile and carpet; however, the cost increases with each higher value of carpet and padding you choose.

    If you choose hardwood floors, that is the most expensive. So, if your allowance is for $ 5000, and carpeting costs $ 4000, then you have $ 1000 to use for something else. Conversely, if your floor choice is $ 6000, then $ 1000 has to come from another line item or from your pocket.

  4. Reply
    mago
    August 10, 2011 at 6:40 am

    your builder has a set price for flooring included in the total price of the house. You can choose whatever type or price of flooring you want, but if you go over the dollar allowance in your contract, you will have to pay the additional cost.

  5. Reply
    your L.A. realtor
    August 10, 2011 at 6:50 am

    * In your contract it will say something like, $ 1000. to go to buyer for carpet allowance. This means the seller will give you $ 1000. credit towards the type of carpet you want. If it exceeds $ 1000. you ,the buyer, is responsible for the balance.

  6. Reply
    revclaus2000
    August 10, 2011 at 7:44 am

    A flooring allowance means that when you go to closing, you’ll get a credit for whatever the amount is. And what that means is that you won’t have to bring so much money to closing, which leaves you with the amount still in your pocket. Or, as one of the answers said, you can ask to have the flooring installed before you close on your house up to the amount of the allowance.

    Yes, talk to your buyer’s agent. And if you don’t have someone representing you, you should! Go to the National Association of Exclusive Buyers Agents website (www.naeba.org) to find one. The agent representing the seller can’t fairly represent you because it’s a conflict of interest.

  7. Reply
    aiownk
    August 10, 2011 at 7:55 am

    Any ‘allowance’ is basically a credit that you will receive on closing.

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