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Buying or Selling a Home/Flooring Allowance New Construction

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Expert: - 4/21/2010


Question
I am buying a new construction home where I have been given a flooring allowance. There is no mention of what is included only "seller to provide $7559 flooring allowance". We picked out some carpet and tile and were told we were over by $1056 and asked if we wanted to pay it or order something cheaper. I assumed the allowance was just for material and the seller would cover installation. Since it was not mentioned what was included, who has to eat the installation cost me or the builder?

Answer
Hello Brad - Usually when dealing with a builder there was the anticipation of 'base' flooring being included in the sales price #incl installation#. When a builder offers an allowance usually, since the builder already anticipated the costs of installation in their construction costs, the allowance covers upgrades in materials only since the installation was already factored. Occasionally the quality of some flooring requires a more qualifies installer. Then, it would be reasonable to anticipate that there may also be an increase in the installation costs that should be passed along to the buyer. You questions suggests that the product costs exceeded the allowance and therefore you are being asked to pay the amount not subsidized by the builder's allowance. On another note, if you are building custom, then the general contractor may have calculated the amount of flooring cost built into the estimate. In this scenario you needed to be certain what the 'allowance' included in the new home build contract. Finally, there are times when a buyer does not desire the builders materials nor the materials provided by the builders sub-contractors. In other words, we want a credit/allowance for flooring and then retain the right to seek our own vendor/company. In this case the 'allowance' would be inclusive of the installation and product costs. Basically, which I anticipate is your situation, the builder will have nothing to do with flooring... so you are seeking a company on you own to provide the product and installation. Therefore, the costs of the product and installation have exceeded your 'allowance' by $1056. In this situation you would be responsible for the installation costs. The benefit to a buyer when taking on flooring allowances is typically that the buyer knows someone in the flooring trade that is allowing them to buy at a steep discount or wholesale, and then a separate company does the installation based per square foot. Ultimately the buyer receives custom quality for the price of standard or builder upgraded pricing. Maybe you should see what the builders vendor/sub-contractor can provide... it might be more beneficial if you don't have a friend in the flooring business. Congratulations on your new home. - Todd Menard

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Todd C. Menard

Expertise

National Association of Realtors Code of Ethics and Professional Standards * Contract Questions: 05/05 Arizona Real Estate Purchase Contract, Exclusive Buyer Broker Contracts, Listing Contracts and associated contract documentation as it relates to boilerplate, covenants, contingencies, procedures and procedures. * ARMLS Arizona Regional Multiple Listing questions * Real Estate Professional Standards and Practices, Ethics, Obligations, Duties * Agency relationships in Arizona, Procurring Cause * Questions typicaly arising during the listing period * Questions typically arising during the escrow period * Questions about working with a real estate agent/REALTOR * Questions Related to New Home Builders

Experience

National Association of REALTORS Board of Director (2011) Arizona Real Estate Salesperson License (1991-1995), Arizona Real Estate Brokers License (1995-Present), Arizona Association of REALTORS Board of Directors (2008-Present), Arizona Association of REALTORS Professional Standards Committee (2008-Present), AAR Certified NAR Code of Ethics and Professional Standards Instructor, Southeast Valley Regional Association of REALTORS President-Elect (2011) Southeast Valley Regional Association of REALTORS Board of Directors (2008, 2009), Southeast Valley Regional Association of REALTORS Grievance Committee Chairperson (1998-2007), Southeast Valley Regional Association of REALTORS Bylaws Committee (2008-Present), Southeast Valley Regional Association of REALTORS Education Committee (2008), Arizona Association of REALTORS Forms Committee - Residential Purchase Contract (2005), Arizona Association of REALTORS Forms Committee - Residential Rental Agreement (2008), Arizona Association of REALTORS Forms Committee - Buyer Broker Agreement (2009), Arizona Association of REALTORS Presidents Advisory Group, Road to Professionalism (2009), Arizona Association of REALTORS GRI Curriculum Review Committee (2009), Arizona Department of Real Estate, Commissioner's Education Advisory Group Sub-Panel B (2010) Arizona Department of Real Estate, Commissioner's Statute and License Review Committee (2007)

Organizations
National Association of REALTORS, Arizona Association of REALTORS, Arizona Real Estate Educators Association (AZREEA), Arizona Regional Multiple Listing System (ARMLS), American Notary Association, Southeast Valley Regional Association of REALTORS (SEVRAR), Southeast Valley Regional Association of REALTORS Women's Council of REALTORS (2010-Present), Phoenix Association of REALTORS (1994-2000, 2005-2009), Scottsdale Association of REALTORS (1994-2000, 2005-2009), Maricopa/Glendale Association of REALTORS (1994-2000, 2005-2009),

Publications
"Real Estate in 2008"- Lifebushido Publishing (Contributory Author), SEVRAR Magazine, Internet Crusade, RealTown ListServe, Blogger.com, Active Rain

Education/Credentials
- AAR Certified Ethics and Professional Standards Instructor, Graduate REALTOR Institute (1993), Certified Negotiation Expert (CNE), Over 100 Hours of annual real estate continuing education, Annual Ethics and Professional Standards Development Workshops as required by the National Association of REALTORS, Approx. 36 hours of NAR Code of Ethics training annually, Numerous IDW, Seminars and Train the Trainer programs, Business Management Degree - 1981

Awards and Honors
2009 REALTOR of the Year Award, Southeast Valley Regional Association of REALTORS (10,000+ Members), Double Platinum Production Award ($45,000,000 Sales Volume)- Keller Williams Realty Int'l (2001), Top 15 Sales Production Keller Williams Realty International (2001), Top 5 Sales Producation Keller Williams Realty Southwest Region (2001), Top Recruiter Award - Keller Williams Realty Int'l, SW Region (2002), Who's Who in U.S. Executive (1983), Who's Who in U.S. Real Estate Professionals (2007)

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