Recently, one of the largest real estate professionals (REPs) trade organizations—the National Association of Realtors® (NAR)—has been in the news regarding a settlement concerning buyer-broker compensation. Effective Aug. 17, 2024, the the National Association of Realtors® (NAR) has reached a settlement in a class action lawsuit that resulted in changes to buyer broker fees in real estate transactions. Here’s how that could affect Veterans and service members using VA’s home loan benefits.
What are the changes?
The settlement will require two big changes in how buyers and sellers are negotiating services from a buyer’s agent:
- When agents list homes on the Multiple Listing Service (MLS) platform, they will no longer be able to include the buyer’s agent’s compensation. The MLS is the listing program that buyers’ brokers and listing brokers use to share information about properties for sale.
- Buyers will be required to enter into written agreements with realtors® before touring a home, and the agreement must include terms about their own agent’s fee.
Why does this change matter for Veterans using the VA-guaranteed home loan benefit?
Historically, Veterans could not pay buyer-broker fees when purchasing a home with a VA-guaranteed loan. In June, VA announced an update to help ensure that Veterans using the VA-guaranteed home loan benefit remain competitive buyers. 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 as of Aug. 10, 2024. This update was intended to ensure VA’s programs continue to promote access to homeownership.
For additional information about this update, please review VA Circular 26-24-14: “Temporary Local Variance for Certain Buyer-Broker Charges,” on VA’s Loan Guaranty Service Resources page.
What this means for homebuyers
- Homebuyers will now be required to sign a written agreement with their agent before touring a home. This contract must explain the buyer-broker fee, as negotiated by the homebuyer and the agent, and the specific services that will be provided by the agent.
- The buyer’s written agreement must include the following four components regarding the buyer-broker fee:
- A prominent disclosure of the amount or rate of compensation the real estate agent will receive and how this amount will be determined.
- Compensation must be objective (e.g., $0, X flat fee, X percent, X hourly rate) and not open-ended.
- A term that prohibits the agent from receiving compensation for brokerage services from any source that is over the amount agreed to with the buyer.
- A prominent statement that broker fees and commissions are fully negotiable by the homebuyer and agent involved and not set by law.
- The seller may agree to offer compensation to your agent, but the offer cannot be shared on the MLS. Buyers may also ask sellers to pay the buyer’s agent’s compensation, even if the seller’s agent did not advertise seller-paid compensation on a platform other than the MLS.
- Buyers can still accept concessions from the seller (up to 4% of the appraised value of the property), such as offers to pay closing costs. Also, because buyers’ agents cannot receive compensation over the amount negotiated with their client, any seller-paid offers of compensation higher than the amount negotiated by the buyer may be negotiated as a seller concession to defray the buyer’s closing costs.
What this means for home sellers
- Sellers can offer compensation to buyer brokers. However, the seller’s agent must clearly disclose and document the seller’s approval of the payment, or offer, that will be made to the buyer brokers.
- This compensation amount cannot be included on the MLS listing. The seller’s agent may advertise the listing on other social media, flyers, and websites other than the MLS platform.
- Sellers can still offer buyer concessions (up to 4% of the appraised value of the property), such as offers to pay closing costs.
What can Veterans do?
When finding an agent to work with, make sure to ask questions about compensation and understand what services are included. It is also your right to negotiate the fees prior to signing a written contract. You should work with your agent to understand how the VA-guaranteed home loan benefit applies to your situation, with the full range of choices when both buying or selling a home.
VA remains committed to providing guidance and policies that ensure Veterans are not disadvantaged in the homebuying or selling process. VA will continue to monitor how the settlement affects the real estate market and keep Veteran buyers competitive in the housing market.
For more information on VA home loans, please visit VA’s Loan Guaranty Assistance page.
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Quick read, good information. I screenshot a lot of it to refer to later, and my agent I am currently working with is great! I will be recommending her, and her company to Vets in and around NC that are thinking about settling down in NC.
Hello my name is Roberta Perkins I am inquirinng about my uncle Henry Bryden whom owns this home. I just have a few questions to askǰ
I appreciate the new information. Has this policy gone into effect to the point that all realtor agencies know this and they act estranged to the new policies. I want to use my home benefit loan but I’m afraid that the agent will act and say that doesn’t apply to them! I want help!!!
My agent hasn’t mentioned any of this new info to my spouse and I. I think some agents will work with you before the paperwork signing needs to be done.
I feel like this made it clear as mud.
So say we are driving around, see a house we like and call the listing agent, now we have to have a contract before they can even show us the house?
I think if you want to work with that agent in some states they may require that, and if it’s an agency that seems a little pricey and big like they manage lots of properties may require some paperwork to be signed first. My spouse and I looked into one agency and they kind of were like that but the vibe with them was off, and not very personable so we didn’t go with them, and found someone better with a smaller agency look into them people that really work for themselves may have a more positive outcome they are there to work for you, and we show you properties without paperwork needing to be signed.
That is correct.
I understand this policy is meant to open up more homes, but I fear the unintended result will be a continuous shrinkage of agents willing to waive brokerage fees. I see nothing in this bulletin that explains how veterans will still have no cost options in home buying.
I’m afraid agents will dupe veterans into agreement to male the agent the veterans agent for a year just to see one home.
In the past, the seller paid the entire commission. Over time, the buyer’s agent scenario surfaced and I was asked to sign a Buyer’s Agent agreement when looking for property. I always refused because, as a single Dad, money was tight and real estate agents were many. So many that I encountered did not listen to my requirements for the type of property I was interested in, but showed me what they thought or had planned to show, this irritated me to no end. Purchasing a home can be tricky and if I’m set to move on it, a Buyer’s Agreement
will deter me from using a Buyer’s Agent, VA or otherwise. There are other alternatives out there. Also, my advice…never purchase property without securing a Real Estate Attorney.
Attorneys cost money I don’t have. I have a great agent that listened to my spouse and I’s needs, and sometimes if the energy and vibe is not right with an Agent then move on make them show you their worth before signing anything my advice.
Why have a va home loan when none gives mortgages to any1 not in what they want in credit score when it’s ment to get a servicemember a home and supposed to be boost not a ceiling so high you can’t reach.
As a vet with not the best credit score Veterans United could do better to give us more considering the market at the time you apply and not focus so much on your credit score which is not really a good reflection of anyone really.
great info the as a veteran, I found helpful.
So what does this mean for a fresh off the homeless corner trying to get a place to live. Could you break down Barbie style what this is gonna do to help a guy with a dog and kids and trying to buy a place for us. Credit ruined from a divorce and behind on child support. Health is worsening by the second. Please do tell homeless since I forgot how long.
Also, likely we will use our own agent to actually purchase the house, NOT the seller’s agent. That’s just stupid. Wth were they thinking. This will deter veterans from buying and realtors from wanting to deal with veterans.
Is it still true that in order to use your VA Loan privileges’ you have to live in the house for one year before you can rent it to a relative?
I was a Licensed Agent for Century 21 Winners Circle in LA. 1999-2006. Sellers do not have to have a Real Estate license/Agent to sell their house. What I understand is that a Buyer has to pay a Real Estate Agent before he/she can be shown properties for sale. This is Bravo Sierra.
Exa. I moved from AR to LA when prices were jacked up. Agents with 4 different companies, locations showed me and my Wife many properties. This would have cost me a ton of $ under the current rules (paying Buyers Agent before showing). I was used to The Buyers agent split the Selling Agent commission which was usually around 6% of the selling cost for homes listed for $100K and less. If the Seller Agent is a dual Agent, he/she would get the full %. It was different for higher price homes. Everything was negotiable.
All of this is nothing but Screwing the Buyer/Veteran. You people seem to think the Vet is loaded with money.
Mr. Crownover… you are incorrect. You do NOT have to pay an agent before being shown properties. What you have to agree upon is their compensation and you have a say in that. It can be at the end of the sale based on a percentage of purchase price, it could be an hourly rate, it could be a flat fee. It’s between you and your agent and you absolutely do NOT have to pay before being shown a property.
I believe in time the comments in this article will become clear to those who can not understand it at this time. I also thank VA News for the update and making the information as clear as possible.
For those doubters remember that with your VA Loan you still do not have to have/make a down payment or purchase homeowners insurance. I think you will reconsider making a purchase if you found this article as a negative for your future plans.
Dennis, yes you are still required to purchase Homeowner’s Insurance or the bank will not give you a loan….
I think you meant to say; you are not required to purchase Mortgage Insurance if you have a VA loan.
You definitely need to get homeowners insurance for your own protection and any foreseeable things that may arise from weather and however long you plan to be in the house it may say the area will flood in 30 years you will want that coverage and protection.
This statement, “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 as of Aug. 10, 2024. This update was intended to ensure VA’s programs continue to promote access to homeownership.” seems like just another way to say, “We want more of your money, up front, and oh by the way, thanks vets”, only with a little bit of artificial sweetener on it. How is requiring someone to sign documents, BEFORE TOURING A HOUSE, beneficial to anyone? My wife and I were thinking of relocating. Guess we’ll think again and “set a spell” right where we are.
To those who made these changes, thanks for nothing.
Jonathan, I’m retired military and now work in real estate. The changes sound like a big deal when you read the articles, but they really aren’t. It’s really basically “business as usual”. What the article leaves out is that the documents you sign “before touring a house” can be set to whatever timeframe you want. You can make the agreement simply for the day, a month, or 6 months. That way you aren’t stuck with an agent you don’t like. And the specific comments about “you can pay for certain real estate buyer-broker fees” do not mean what you seem to think they mean…
Previously (as mentioned in the article), the VA would not allow you (the veteran BUYER) to pay your agent; it had to come from the SELLER. According to the settlement between DOJ and the Natl Assoc of Realtors, if you agree to reimburse your agent 3% of the selling price of the home, but you find out that the seller is only willing to compensate your agent 2%, you (the buyer) are responsible for out-of-pocket expenses to compensate the remaining 1% due to YOUR agent. Based on previous rules, the VA would not allow this and your home purchase would be in jeopardy. What they are saying in the article is that the VA will now allow this difference and ensure it is covered as part of the VA loan process.
Yeah I understand that and working with Veterans United they are protecting so I won’t have all this out of pocket costs money that I don’t have for my spouse and I to be first time homebuyers.
Since this information is now available from the, “Veterans Administration”, Is the “VA” VERIFYING WHO THESE PEOPLE ARE? In the, State of North Carolina, this is a huge problem, “BROKERS” WITHOUT A “REAL ESTATE LICENSE”, “BROKERS” Who are doing business in the, “STATE OF NORTH CAROLINA”, Through “RECIPROCITY”, Whom Have Been, “TERMINATED” IN OTHER STATES. The, “VETERANS ADMINISTRATION”, NEEDS TO VERIFY EVERY SINGLE AGENT, BEFORE APPROVING A “VA LOAN”, AND VERIFY IF PREVIOUS LOANS HAVE BEEN TAKEN OUT ON THE SAME PROPERTY NUMEROUS TIMES, FILLED WITH THE, “VA”. In the State of, “NORTH CAROLINA” This is what is being done, “MULTIPLE LOANS”, ON THE SAME ADDRESS BEING DONE BY “CROSSING STATE LINES”, GEORGIA, FLORIDA, NORTH CAROLINA. The “VETERANS” Have “NO” Idea that this has happened until one of the loans “DEFAULT” And sometimes the, “LOAN COMPANIES” ARE “NOT” AWARE OF THESE CRIMES!!! Read the New Law, Published by, “FINCEN” Financial Crimes Enforcement Network, “FINCEN FINALIZES RESIDENTIAL REAL ESTATE REPORTING REQUIREMENTS”, September 5th, 2024. The, “Veterans Administration” Should be using this as a guide to protect their, “Veterans”, Their “Family Members” And Their “Surviving Spouses”. By the year “2030” TRILLIONS OF DOLLARS WILL BE LOST DUE TO, “FRAUD”, “WASTE” AND “ABUSE” DUE TO ALL OF THE ABOVE IF NOTHING IS DONE ABOUT IT. I have already contacted, President Joesph Biden, The White House, The FBI, The Veterans Administration., about these very egregious crimes. Please ask questions about who is your, “BROKER”, “REAL ESTATE AGENT”, In the State that you are buying your house in, with the appropriate, “FEDERAL AGENCIES”. Thank You!
Quancidine Hinson-Gribble, Mortgage Fraud Task Force, LLC. Thursday, September 5th, 2024.
The Article missed Two (2) BIG issue concerning the Seller’s contracts:
1. The MLS is taking ownership of all information related to the property being sold.
This does not benefit the Seller but allows MLS to make money off “your” data that has now been agreed to the be owned by MLS and
allow MLS to sell this data/information.
2. This is the BIG, BIG one, the seller is agreeing to pay legal fees and “hold harmless”, the Buyer’s and Seller’s Brokers and Agents if any of
these are sued for “issues” related to the property and its viewings.
This could, potentially, be a financial nightmare for the seller.
I cannot see HOW this “Change” affects us veterans! Looks to me like all it does is make ALL home buyers (Vets or not) pay a lot more in FEES to buy or sell a house. I think this will cause MOST VETS to NOT BUY a house from this time on. Guess we just gonna have to RENT from now on. I will NEVER “SIGN” any agreement of any kind prior to receiving the goods.
Ed. you do not / will not pay anything unless / until your Agent’s efforts (on your behalf) result in a sale (you are now the owner of the home you presumably wanted). The Buyer – Broker (Agent) agreement is a CONTRACT. You agree to pay the Agent for them assisting you to purchase a home. If you and your Agent work for 6 months (pick any period) and do not complete the purchase process then tthe Agent will have spent
his/her/their time for nothing and you will owe them nothing. Imagine any other line of work where you would/could/might work for any time period and not get paid. Anyway Ed, you are only agreeing to pay WHEN the goods are delivered, not before.l
I’ve been in my house for about 9 Months will we receive so sort of reimbursement.
Reimbursement for what? Nothing has changed for fees, charges, etc.
I have purchased 5 homes since discharge in 1965 never used my va loan as agents discouraged it. Weither fees to them passing appraisal or whatever. Think new laws will make agents less willing to work with veterans?
So this will have awesome protections for the Veteran, but I candidly wonder how many agents will discourage VA loans in hotter real estate markets knowing that military homes will need far more transparency and protection?
I hope it isn’t a red tape situation that literally works against veteran homeownership…..in some markets, hours can make or break a sale. I pray this will protect more people to battle the veteran homelessness epidemic that simply shouldn’t exist in a free developed country.
Chad, this is not a veteran-specific issue but rather an industry-wide change. The VA is simply letting you know of the changes and saying that you can still use your VA home benefits. As for military homes “need far more transparency and protection”… nothing has changed with VA loans other than they will now allow some buyer-broker expenses that they previously would not allow. Your home desirability and your purchasing power remain the same.
Can a veteran use the benefit if they own a house and buy another?
When I went to sell my home the first offer fell through. When I spoke to my lender they said if I had a signed year lease or rental agreement for my current house I could use my va benefits to purchase a new home. I would have to live in the new home for one yr though.
Hope this answers your question. Best to speak to a lender. Good luck.
This new law is VERY CONFUSING ! ! Who is an agent ? Is the Broker the company who is listing the property? OR is the Broker the one showing the property?
Beverly, I’m retired military and now work in real estate. I understand how the terms can be confusing. Real Estate Agents (or REALTORs) work under a brokerage (think of a company) led by a licensed broker. All brokers are also agents, but not all agents become brokers (more certification required over agent). The broker has a lot of legal responsibility regarding his/her agents, hence documents often reference the broker.
In the context of this article, when you read broker, simply think “agent”, whether representing a buyer or the seller. Hope this helps.
Great info for VA Buyers. I am a Veteran and a Realtor that focuses in helping other Vets. Lots of bad info out there and grateful this article was correct and direct.
What market are you in?
Dallas-Fort Worth. Been in the industry around 5 years. It’s home to me and a great area for Veterans and their families.
I’ve been in my house for more than 5 years. Will any of this effect my property at this point or other wise?
So what changes have VA loans made to help with this change? I guess this leads to less quality homes and/or homeownership for vetereans. Who wants to agree to something that is not as advertised because the computer can definitely paint a different picture from the real.
Sure am glad they created all these overly complex rules that no-one can possibly remember! R.E. agents are almost obsolete with the advent of modern technology & tools like Zillow, Redfin county websites, MLS for sale by owner (fsbo) etc.
Philip, just for clarity these rules were not a VA creation. This is an industry-wide change that came about from a settlement between the DOJ and the Natl Assoc of REALTORs. Not sure if you were aimed at the VA with your comment or not.
VA buyer buying from FSBO. WHAT
are the disclosure rules?