Real Estate

VA Officially Unveils Rules To Allow Vets To Pay Broker Commissions

The temporary rules were first announced in May ahead of Memorial Day and came in response to calls from Realtors who feared veterans would become less competitive in the new landscape.

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The U.S. Department of Veterans Affairs unveiled new rules on Tuesday that will temporarily allow veteran buyers to pay their buyer broker fee when buying a home under a government program intended to benefit them. 

The temporary rules were first announced in May, just days ahead of Memorial Day and came in response to widespread calls from Realtors who feared veterans would become less competitive in the landscape that’s expected to emerge in the wake of lawsuits targeting real estate commissions.

Veteran buyers were previously barred from paying their brokerage commissions, whether or not they had the money to do so. After rule changes take effect this summer, more sellers are expected to forego paying buyer broker commissions, which could have impacted veteran buyers disproportionately.

In issuing the temporary rules, the VA said veteran buyers could pay for their agent’s commission.

“Specifically, eligible Veterans, active duty service members and surviving spouses who use their VA home loan benefits can pay for certain real estate buyer-broker fees when purchasing a home,” the VA said in a statement. “This update is intended to ensure VA’s programs continue to promote access to homeownership for Veterans.”

The VA encouraged veteran buyers to negotiate their broker fee directly, and it said sellers can still pay the buyer broker fee. 

The agency said veterans using the program weren’t allowed to finance the commission as part of the loan. The VA also noted that it doesn’t treat the seller’s payment of buyer-broker commissions as a concession.

Many of the changes coming for the industry are a result of a proposed settlement agreement reached by the National Association of Realtors in March. The settlement will remove offers of compensation from Realtor-owned multiple listing services. It will also require buyer agents to have a signed buyer representation agreement with a client before touring homes. That agreement must document how much the agent will be paid for their services.

NAR’s proposed settlement is set for a final court approval on Nov. 26 in the Western District of Missouri.

Collectively, the changes are expected to lead more buyers to negotiate their commissions directly with their agents, and it may lead to fewer sellers offering to pay for a buyer-broker commission.

NAR started a lobbying effort to get the VA to change its rule and allow veterans to pay their broker’s commission in the event that a seller hasn’t offered to do so.

NAR President Kevin Sears applauded the temporary rule change in a statement on Tuesday.

“The VA’s home loan guaranty is the only program that explicitly bans buyers from directly paying for professional real estate representation,” Sears said. “We applaud the VA for revising this policy and allowing veterans and active-duty service members the same advantages as other buyers in a competitive real estate market.”

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