Thanks to extensive lobbying by the National Association of REALTORS® (NAR) and a temporary local variance recently issued by the U.S. Department of Veterans Affairs (VA), veteran buyers will not be prohibited from paying their own brokers if the home purchase depends on this as a term of the agreement.
This variance becomes effective August 10, 2024, so it will coincide with the NAR practice changes for brokers which begin August 17, 2024.
Until now, military veterans using VA home loan financing have been prohibited from paying commissions to their buyer brokers. But on Monday, the VA announced that a temporary change would take effect while it considers a more permanent solution. The VA wants to ensure that veterans who seek the benefits of VA home loan financing aren’t put at a competitive disadvantage compared to homebuyers using other financing.
The key points of this temporary variance are:
- The home the veteran is buying is located in an area where:
- Listing brokers must not offer buyer-broker compensation through an MLS; OR
- Buyer-broker compensation can’t “be established by or flow through the listing broker.”
- Buyer-broker charges are not included in the loan amount.
- The VA encourages the buyer to negotiate the buyer-broker compensation.
- This still allows the seller to pay the veteran’s buyer-broker charges.
- The VA does not treat the seller’s payment of buyer-broker charges as concessions.
In addition, the VA encourages buyers to negotiate in advance how much they will pay buyer brokers for their expertise. Under these circumstances, sellers can agree to pay all, some, or none of the compensation for buyer brokers.
“The VA’s home loan guaranty is the only program that explicitly bans buyers from directly paying for professional real estate representation,” said NAR President Kevin Sears. “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.
“NAR launched an all-hands advocacy effort on this issue, including working with Congress and the relevant VA Committees, meeting with the VA, collaborating with industry partners and holding hundreds of meetings on Capitol Hill during the REALTORS® Legislative Meetings in May.
“We look forward to continuing this conversation, and our 1.5 million members stand ready to support the VA in whatever way possible to protect the brave men and women who serve this country and ensure they are given the equal opportunity to achieve the American Dream of homeownership.” Read the VA announcement, “Temporary Local Variance for Certain Buyer-Broker Charges.”
