The Department of Veterans Affairs will temporarily lift a ban on buyers paying professional real estate agents directly until officials determine they need to enter a formal rulemaking process, VA officials said Tuesday at a Mortgage Bankers Association conference in New York.
While not an official announcement, comments from VA Deputy Director for Policy Michelle Corydon drew relief from the real estate industry because VA mortgage guarantees are the only loan program with this explicit prohibition. If selling brokers do not offer compensation to buyers’ brokers, veteran buyers will have limited options, potentially leaving veterans without professional representation or forced to switch to less favorable loan products.
“NAR launched an all-hands-on-deck advocacy effort on this issue, meeting with VA officials, negotiating with lawmakers and rallying our industry partners to get this ban lifted,” said Shannon McGurn, chief advocacy officer for the National Association of Realtors. “It’s also a testament to the thousands of REALTORS® who came together in Washington just a few weeks ago with a unified message. Without this change, thousands of veteran buyers could be denied access to professional representation in their pursuit of the American dream of homeownership. This additional step will give veterans an equal opportunity to compete with others in a tough housing market. We applaud the VA for recognizing this danger and acting quickly to protect veterans.”
VA’s current policy states that veteran buyers who are using VA loan benefits “shall not under any circumstances be charged a commission or fee in connection with the services” of real estate professionals. This policy could create complications for these buyers in light of the practice changes called for in NAR’s proposed settlement agreement. The practice changes prohibit listing brokers from posting compensation on the MLS, and require MLS participants who work with buyers to enter into a written buyer agreement with their client that outlines the amount of compensation the buyer’s agent will receive and how that amount will be determined.
NAR submitted a letter to the VA in late March, urging policy changes to ensure veterans maintain access to the VA’s mortgage program, which has been a key avenue for service members to achieve homeownership.
“Without a seller’s offer of compensation, VA buyers are immediately put at a disadvantage and may be forced to forgo professional representation, lose their already limited inventory of properties, choose a different loan product, or exit the market altogether,” the letter states. “The VA Home Loan Guarantee Program is a critical homeownership tool that provides veterans with a focused, affordable, and accessible path to homebuying as a reward for their service to our nation. NAR wants to ensure that VA buyers can be active participants in the real estate market and achieve the American dream of homeownership.”
