The Department of Veterans Affairs has announced that it will allow home buyers with a VA-guaranteed mortgage to pay their real estate agent a commission.
The temporary policy, which takes effect on August 10, 2024, will remain in effect while the VA observes recent changes in the home-buying market and develops a permanent rule.
Service members and veterans with VA loans are currently not permitted to pay a fee or commission directly to their agent or broker. This follows a longstanding practice in the real estate industry in which the brokers for both the home buyer and the seller would split a commission that was paid by the seller. That commission"usually 5% to 6%"would typically be baked into the sales price and subsequently rolled into the buyer's mortgage.
However, that model is changing as a result of a $418 million real estate settlement between a group of home sellers and the National Association of Realtors (NAR) in late March. Under the agreement that takes effect in August, buyers will negotiate their fees directly with their brokers before beginning the purchase process. Sellers could still opt to pay those fees.
'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 they remain competitive in the rapidly changing housing market,' said Joshua Jacobs, VA. undersecretary for benefits, in a statement.
While the temporary policy will allow buyers with VA mortgages to pay broker commissions, it is subject to certain conditions:
In addition, the VA is encouraging home buyers to negotiate buyer-broker commission rates, even if they're being covered by the seller.
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