Impact to Veterans & Service Members from the March 2024 NAR Department of Justice Ruling

Need to know for Veterans & Service Members

Current VA Policy: The Department of Veterans Affairs (VA) Home Loan Program prohibits Veterans/Service Members to pay real estate commissions in the use of their Home Loan Program for the purchase of a home.

Here’s the link to VA Lenders Handbook that addresses the policy stated above:

 VA Lenders Handbook, Chapter 8

The language in the handbook is as follows:

“Fees or commissions charged by a real estate agent or broker in connection with a VA loan may not be charged to or paid by the veteran-purchaser. While use of “buyer” brokers is not precluded, veteran-purchasers may not, under any circumstances, be charged a brokerage fee or commission in connection with the services of such individuals. Since information on property available for purchase and financing options is widely available to the public from a variety of sources, VA does not believe that preventing the veteran from paying buyer-broker fees will harm the veteran.”

Impact to Veterans/Service Members

Changes, both legally and procedurally, are in the works to adhere to the March 2024 Department of Justice ruling (See my Blog on March 18). One of these potential changes are for Buyers to sign written agreements with Buyer Brokers (Agents) for real estate services. With this potential change, Veterans/Service Members may have to re-assess their strategy in purchasing a home because as stated above, the current policy of the VA Loan Program prohibits VA Buyers to compensate Buyer Brokers (Agents) for their services.

So, here’s some things to think about …

- Impact 1 – Potential decline in Housing Options: What incentives exist for Buyer Broker (Agents) to represent a VA Buyer if the Selling Broker DOES NOT offer to pay the Buyer Broker (Agents) commissions? Essentially and candidly, there's very little. With that said, potentially, Veterans/Service Members may see a decrease in housing options

- Impact 2 – No Professional Representation ... If the Selling Broker DOES NOT offer to pay the Buyer Broker (Agents) commissions

- Overall Impact: Given Impacts 1 and 2 above, Veterans/Service Members may opt to use other financing options, which may potentially result in the following: (a) increased out of pocket costs; and (b) decline in housing options because of the additional upfront costs. Alternatively, Veterans/Service Members will be essentially priced out of the market entirely.

Potentially a glimmer of light is in work ...

Just recently, the National Association of REALTORS® (NAR) submitted a letter to the VA urging them to revise its policies pertaining to fees veterans cannot pay when using their VA home loan benefit. While this is good news, it will likely be some time before changes are formally made to VA’s current policy, given the time and details required to process through the various government approval levels

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All the info stated above is subject to change as the DOJ/NAR settlement is still under discussion.

Moving Forward … As veterans ourselves, Enknovate is a proud supporter of Public Servants (Military, First Responders, Teachers, Nurses, and etc.). When you’re ready to make your next move, contact us … we will be honored to support and serve you in satisfying your housing needs.

We support those who support us!