What Is Allowance?
An allowance is a set dollar credit a builder or seller offers toward a specific item — most commonly flooring or carpet — instead of installing a particular product themselves, letting the buyer choose and pay any difference for their own preferred finish.
Example
A builder might include a $3,000 flooring allowance in the base price; a buyer who selects $4,500 in flooring pays the $1,500 difference.
Related Terms
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This definition is provided for general educational purposes and is not financial, legal, tax, or real estate advice. Verify important decisions with appropriately qualified professionals.
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