VA Plans to Temporarily Allow Buyers to Compensate Agents

Blog posted On May 23, 2024

The Department of Veterans Affairs (VA) has finally broken its silence on the future of buyer’s agent commissions for borrowers using VA Loans. In an unofficial announcement on Tuesday, VA Deputy Director of Policy Michelle Corridon stated that the Department plans to temporarily lift its restriction on that prohibits buyers from directly paying for professional real estate representation. This circular is slated to be issued between now and June 12, and will help buyers while the agency engages in a formal rulemaking process for a longer-term solution.

Why the VA is lifting the ban

The change comes as a solution to challenges resulting from the National Association of REALTORS® (NAR) proposed settlement earlier this year. In the proposed settlement, NAR outlines that it will prohibit listing brokers from making offers of compensation on the MLS and require MLS participants working with a buyer to enter into a written agreement that outlines buyer’s agent compensation.

This poses significant challenges for buyers who want to use the VA for home financing because of the Department’s current policy that states they “may not, under any circumstances, be charged a brokerage fee or commission in connection with the services [of a REALTOR®].”  

The industry’s response

In a letter to the VA, the Mortgage Banker’s Association stressed that VA borrowers will be greatly disadvantaged – especially in the current low-inventory market – if they can’t compensate real estate agents. “In situations where no offer of compensation is offered from a seller, VA buyers are immediately at a disadvantage, potentially forcing them to forego professional representation, lose a property in an already limited inventory, choose a different loan product or exit the market entirely,” the letter read.

NAR also chimed in on the conversation. “NAR launched an all-hands advocacy effort on this issue, meeting with VA officials, engaging with lawmakers and rallying our industry partners to ensure this prohibition was lifted,” said Shannon McGahn, the chief advocacy officer at NAR. “Taking this extra step ensures veterans have the same opportunity as others to compete in a tight housing market. We applaud the VA for recognizing this danger and acting swiftly to protect veterans.”

Read more about the upcoming change here: www.nar.realtor/magazine

Have questions about what this means for you? Reach out and we’d be happy to talk more.

Sources: National Association of REALTORS®