VA Offers Updates because Of New Real Estate Agent Commission Rules

As many people know, a recent settlement after several years of litigation, including class-action suits from home sellers and a legal battle with the U.S. Justice Department is dramatically changing the way Real Estate Agents do business, how they get paid, and how they charge commission fees for their services. As part of the settlement, the realtor group agreed to prohibit offers to compensate the buyer’s agent from being posted on multiple listing services (MLS), a practice that critics say reduced price competition and led to inflated commissions and home prices.

On a typical home sale, the agent listing the house would charge the seller a 6% listing fee. When the house sells, that 6% fee would be split between the selling real estate agent, and the buying real estate agent. A buyer would not paid their agent directly. Within the MLS (multiple listing service) listing for the house, the amount the buying agent would be paid for selling the home would be be listed.

According to the recently settled suit, the amounts paid to the buyers agent, being already pre-determined, is a form of antitrust, and pushing up commissions to the agents higher than the service they provided warrant.

Under the new rules, a buyer will need to negotiate with the buyers agent over what the buyer is willing to pay their agent for their services instead of the buyers agent getting an automatic split percentage.

Confused yet? Welcome to the club. There will be a lot of confusion with Real Estate Agents, buyers, and sellers for some time to come as a decades long practice changes.

As a VA home loan lender in CO, FL, IA, MN, ND, SD, and WI, or VA loan experts are staying on top of all the changes to help guide you to a successful, and stress free home purchase.

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VA home loans, like many other loans, prohibit lenders and other third part loan service provides from charging certain, and excess fees to a veteran buying a home, or getting a home loan.

The U.S. Department of Veterans Affairs announced that eligible Veterans, active-duty service members, and surviving spouses who use the VA-guaranteed home loan benefit that the veteran can pay for certain real estate buyer-broker fees when purchasing a home beginning Aug. 10, 2024.

This will help ensure that Veterans remain competitive and are not disadvantaged on the homebuying market due to changes that may result from a key class-action settlement involving the National Association of REALTORS®.

Previously, Veterans could not pay their buyer-broker fees when using their home loans benefits.

The VA home loan program is a major benefit to our military personal interested in becoming homeowners. Created in 1944 as part of the Servicemen’s Readjustment Act — also known as the “G.I. Bill of Rights” — this program has provided over 28 million loans to Veterans to date.

“We always want to put Veterans and their families in the best possible position to buy the homes they want, and that’s what this update is all about,” said Under Secretary for Benefits Joshua Jacobs. “Veterans using VA home loan benefits can now pay reasonable and customary amounts for certain charges — including commissions and other broker-related fees — thus ensuring that VA home loans remain competitive in the rapidly changing housing market.”

VA will continue to monitor how the settlement affects the brokerage market and looks forward to pursuing a rulemaking, adding that veterans can and should still negotiate their buyer-broker fee. In addition, nothing in the settlement prevents Veteran home-buyers from asking sellers to pay the fees at closing, which has long been and continues to be, a viable practice under VA’s rules.

In addition to other safeguards, all buyer-broker fees charged to Veterans using the home loan benefit must be reasonable and customary within local markets.