What the Changing Real Estate Agent Commission Fee Structure Means for Military Veterans

As we celebrate the 80th anniversary of the GI Bill, it’s important to recognize that the Veterans Affairs (VA) home loan has helped more than 28 million veterans and their families access a home that meets their needs and budget.

Now, following a recent settlement altering how real estate agents are paid, the VA has taken action to help safeguard the valuable benefits of this program. Through this temporary policy, members of the military can continue to have an equal opportunity to homeownership as the settlement takes effect.

Why is this fix needed?

The VA has always prohibited borrowers from paying commission to their real estate agent. Because buyer agents and seller agents have traditionally split the commission paid for by the seller, this has rarely been an issue, until now.

In March, the National Association of REALTORS® came to a settlement agreement that will change housing transactions. Starting August 17, home buyers will likely need to sign a representation agreement with their agent while home sellers will no longer advertise buyer agent commissions in their listings and may decide not to offer this compensation at all. Instead, buyers and their agents will directly negotiate payment and services.

Because of the guidelines in place for the VA loan, veterans and military members who use the loan could have been deprived of assistance and representation in the largest financial transaction of their lives. Fortunately, the VA’s temporary policy brings welcome relief to VA home buyers.

Beginning August 10, eligible veterans, active-duty service members and military spouses will be able to pay for certain buyer agent fees when purchasing a home.

This change will allow VA loan borrowers the same advantages as any other buyer in today’s competitive housing market, especially for those navigating the market for the first time or relocating to a new area (as many military personnel are).

Had the VA not acted, the pool of housing options for VA loan recipients could be limited, restricting many to looking at homes where the seller is willing to offer a split commission to cover the buyer agent.

Yet, it’s important to remember this fix from the VA is only temporary. As the impact of the settlement unfolds in the coming months, a long-term, permanent solution must be established to protect those who have served our country.

What are VA loans?

Originally created as part of the GI Bill, the VA Home Loan Program is a privately funded mortgage backed by the U.S. Department of Veterans Affairs that maximizes opportunities for America’s active duty and military veterans in recognition of their service to our country.

With military families relocating roughly every two to four years, this valuable program protects them from paying additional costs while navigating new or unfamiliar communities.

The program offers many benefits, including no mandatory down payment for borrowers, no pre-payment penalties or need for private mortgage insurance, limited closing costs and default assistance.

These benefits were created to last a lifetime. Military veterans can use the program multiple times – and they have. Today, more than 3.7 million veterans have active VA home loans.

Do veterans need a real estate agent?

Real estate agents provide valuable guidance for buyers by helping them navigate real estate jargon and avoid delays or costly mistakes in the transaction; offering resources and information on local amenities and schools, utilities, zoning rules and more; and aiding buyers in negotiating an agreement that meets their needs and budget.

It should be the buyer’s choice to utilize a real estate agent, and veterans should continue to have that choice, just as every other American does.

What is next?

Members of our nation’s military have selflessly served our country. Whether currently enlisted or a veteran, they should be able to rely on the full benefits of the VA loan, not be placed at a disadvantage.

As veterans and their families navigate the home buying process under these changes, they can still ask sellers to cover the buyer agent’s compensation at closing and are encouraged to negotiate the fees with their agent.

We applaud the VA for their swift action to revise the home loan policy and put our servicemembers first.

About the American Property Owners Alliance
The American Property Owners Alliance (The Alliance) is a nonpartisan, non-profit organization created to protect and support property owners and pave the way for future property owners. Our mission is to educate property owners about federal issues, laws and policies; to advocate for owners’ rights and interests; and to mobilize, when necessary, to secure those rights and interests.
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