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90% of the time (even on high end homes) we always specifically note that appliances are not in the contract for this reason. Its why we also sometimes exclude pricy light fixtures from the contract. The client does not want to pay mark-up and the builder does not want to be stuck with call backs because of dings, scratches, failed appliances.
If they can get you a discount go for it; however in my area they usually don't have much pull once you move to upper end appliances & a good shopper can get equally good deals on those by buying multiple appliances at once. If this is several thousands of dollars in appliances it might be worth the mark-up to get them rolled into the cost when you finance. If you put an appliance allowance in the contract it will trigger the same cost-plus scenario unless you convince the contractor he won't be answerring for them.
We haven't signed the contract yet, which is why I'm asking now Hoping to sign by next week.
I could understand the fee on things that actually have to be installed, like the wood stove and dishwasher. I just don't get why we should pay the fee on things like a refrigerator when all you do is plug it in?
I think this could be negotiated. Remember this is your money and he needs your business. The economy has changed and contractors need to stop trying to live by the old booming economy standards. Be strong and do not let them push you around.
You do not indicate if you are getting a builders discount on the appliances. As noted, many times there is a price discount for them because the builder buys so many appliances and will steer customers to a particular store. If this is the case, you need to evaluate that discount and see if it makes up the difference between the builders fee and the price you can get.
Then it is matter of if you can afford to pay for or finance the appliances separately. Keep in mind that some communities require a completed kitchen with some appliances for a Certificate of Occupancy to be issued. This may require you to have certain appliances in place at the time of closing. That may require some builder cooperation. Again it needs to be negotiated. good luck, Jay
If the price of the appliance itself is reasonable, as that it's not full MSRP but what you can readily purchase at retail yourself, then 12% is fair. Time isn't free, and the fact that your contractor does need to spend some time in purchasing, delivery, installation, etc. means that they ought to be compensated for that time too.
Run the numbers to see what the real dollar amount would be ... to say it costs $50 to install an OTR microwave sounds quite reasonable, but if it's a $250 microwave, then that meant installation was 20%!
Thanks to all who have posted - appreciate it
We are not paying MSRP - we are getting his builders discount.
As of today he has agreed to charge us the 12% only on things that require some installation - like the microwave, and still allow us to use his discount to buy the other things we need. Since we do want all these things rolled into the loan this works for us.
I have been a General Contractor for over 25 years. I flipped many investment properties and worked on plenty of kitchen, bath and home remodels in my life. My clients picked out and paid for their own fixtures and appliances. That was never part of my bid. When I flipped properties, I paid out of pocket until I was ready to sell and worked out my profit during the re-sale of the home, condo or commercial building I completed.
I do not know why this contractor is adding a 12% fee, unless that is his labor fee for installment. It is unethical to be making a profit from appliances since he is not a retailer. Which in that case he would be required to pay taxes on the 12%. My wife owns three retail boutiques, so I have some knowledge in how the retail market runs.
It is always a good thing to ask questions to make sure you understand what your paying for. Then you can make an intelligent decision whether to stay with this contractor or use someone else.
I tell my potential clients to get at least three bids from three different contractors so that they know my bid is fare. I also am willing to negotiate if I can. I have also turned down clients if I feel they are trying to take advantage of me. It works both ways.
Good luck. I hope I have helped answer your question, as well as any concerns you may have about contractors.
Last edited by Ultrarunner; 06-12-2014 at 09:21 PM..
Reason: Mod Cut Link
My contractor installed appliances for free (included in the contract) and bought them for below cost (I looked at big box sales, and negotiated with a mom & pop and his guy had a lower cost).
Don't pay 12%. Worst case scenario is to buy them all from the same store and try and score a 0% finance charge for as long as possible.
My last two homes were new builds. Included in the base price were a stove, microwave over the stove, and a dishwasher. I could have upgraded to a better model which we did on the stove. I also could have ordered a fridge, washer/dryer which would have been added to the purchase price. They offered upgrades on them also. I brought my own fridge, washer/dryer.
We are not paying MSRP - we are getting his builders discount.
As of today he has agreed to charge us the 12% only on things that require some installation - like the microwave, and still allow us to use his discount to buy the other things we need. Since we do want all these things rolled into the loan this works for us.
Thanks again to everyone who posted
I can see both sides of the coin. if you are actually paying his builder cost, which should be cheaper than if you went out a purchased the item on sale......... I can see him marking it up some, there is work involved with delivery, coordination, coordinating the install, getting you picking it out etc.
On the other hand, paying 12% on a $2500 fridge that involves delivery that you paid for(or was included) and basically just setting it in place..... seems a bit excessive, where 12% of the cost of the stove hood, and dishwasher, coordinating the install and dealing with the issues on that, seem reasonable.
I would be assuming that the install would be either included in your original contract, or charged on top of this amount. Even "free install" isn't really free, its being paid for somewhere.
Hi,
So my contractor added 12% for his commission on the appliance purchases that he handled but the invoice from the appliance company had the fees for install and delivery which they provided and he was not present to oversea because we ended up getting the wrong stove delivered. The unit was returned and the new unit had delivery and install charges again. So, it appears that he got paid 12% of the install and delivery fee charged from the appliance company. The total fees for the delivery and install of all appliances by the end was a total of $1282.90.
Your thoughts?
Jenn
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Hoping to sign by next week. 
Contractor charging 12% fee to install appliances
