The temporary rules were first announced ahead of Memorial Day in May in response to calls from real estate agents who feared veterans would be less competitive in their new environment.
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The U.S. Department of Veterans Affairs unveiled new rules Tuesday that will temporarily allow veteran buyers to pay buyer’s agent fees when purchasing a home under a government program designed to benefit them.
The temporary rules were first announced in May, just days before Memorial Day, in response to widespread calls from real estate agents who worried veterans would be less competitive in an environment where lawsuits over real estate commissions are expected to emerge.
Previously, experienced buyers were prohibited from paying brokerage commissions, regardless of whether they had the money to do so. More sellers are expected to forego paying buyer agent commissions when rule changes take effect this summer, which could disproportionately impact experienced buyers.
In issuing the interim rule, the VA said veteran buyers can pay their agents’ commissions.
“Specifically, eligible veterans, active-duty service members and surviving spouses who use VA home loan benefits can pay certain real estate buyer’s agent fees when purchasing a home,” the VA said in a statement. “This update is intended to ensure that the Veterans Administration’s programs continue to promote veterans’ access to homeownership. “
The VA encourages experienced buyers to negotiate agent fees directly and says sellers can still pay buyer agent fees.
Veterans using the program are not allowed to use committee funds as part of the loan, the agency said. VA also notes that it does not consider a seller’s payment of a buyer’s broker’s commission to be a concession.
Many of the changes coming to the industry are the result of a proposed settlement reached in March by the National Association of Realtors. The settlement will eliminate compensation proposals for multiple listing services owned by real estate agents. It also requires the buyer’s agent to sign a buyer’s representation agreement with the client before touring the home. The agreement must document how much the attorney will pay for his or her services.
NAR’s proposed settlement will receive final approval on November 26 in the Court for the Western District of Missouri.
Collectively, these changes are expected to result in more buyers negotiating commissions directly with agents and may result in fewer sellers willing to pay buyer’s agent commissions.
NAR began lobbying to have the VA change its rules and allow veterans to pay a broker’s commission if the seller did not offer to pay the broker’s commission.
NAR President Kevin Sears applauded the temporary rule change in a statement Tuesday.
“The Veterans Administration Home Loan Guarantee is the only program that explicitly prohibits buyers from paying professional real estate agents directly,” Sears said. “We commend the Veterans Administration for revising this policy to give veterans and active-duty service members the same advantages as other buyers in a competitive real estate market.”
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