Home Building Contracts

"Hi Carl,

First, thank you so much. Everything is incredibly helpful.

I have a question on finished goods such as flooring. My contractor has allocated an amount for flooring, but would the installation be part of the flooring cost.

The house is a fixed cost and I will be upgrading flooring and windows. As he allocated $7 per square foot would that include installation? This is based on your calculator.

He has a separate profit margin. If a bid comes under and he does not show it to me should he not allocate the money to other areas such as the finish work?

Hope you can help


Hi Rene,

No two home construction contracts are alike, but all contracts should spell out building allowances in detail to avoid conflicts “down the road”.

You’re not even “down the road” and you have a conflict.

If you haven’t signed your contract yet, I recommend that you read my book, read “Home Building-Budget-Allowances”, and sit down with your builder (General Contractor) and “iron out” these questions that you have

Allowances should be indicated as a dollar amount, not per sq. ft., as no two people will measure the square footage of a room, a wall, a floor, or even the house, and come up with the same square footage.

Allowances such as flooring usually have to include labor, otherwise how would the flooring get installed? The same holds true for countertops, appliances, tile, wallpaper, and other decorative items.

Window upgrades don’t include additional framing labor and since framing labor is included in the “building” of the house, there would be no additional charge for labor. If you add a window, you add labor as well as the window.

If you have your allowances spelled out as dollar amounts and you are over or under in one category, the “norm” is that you can adjust the dollar amount in another category allowance to compensate. I would not accept a contract, if I were you, that didn’t have it this way.

Never rush into a home building contract. There are too many things to consider that could become items of contention later.

Have your contract reviewed, if possible, by a good “Real Estate Attorney” BEFORE you sign it.

Leave NOTHING, or as little as possible, to interpretation latter by you or your builder.

The road to hell is paved with bad home building contracts.

It’s not hard to do it right and a really good builder will be sure that his/her building contract is clearly understood and agreed to as he or she probably learned the hard way, as I did, to do it right.

Good luck,
Carl Heldmann, byoh.com