Understanding the NAR Settlement and Its Impact on VA Borrowers

What Happened as a Result of the NAR Settlement?

A few months ago, the National Association of Realtors (NAR) agreed to eliminate the requirement for listing agents to offer compensation to buyer agents through the Multiple Listing Service (MLS). This significant change means that buyer agents must now negotiate their fees directly with their clients, rather than relying on the seller's agent to share the commission.

Why Would it Cause Problems for VA Borrowers?

According to Chapter 8 of the VA Pamphlet, "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." This rule essentially prevents veteran homebuyers from being charged or paying real estate agent fees.

With the new NAR rule making it optional for sellers to contribute to buyer agent fees, some sellers might choose not to offer this compensation. This scenario can leave VA borrowers without proper representation, putting them at a disadvantage in the homebuying process.

How Does the Recent VA Announcement Help?

Recognizing the potential disadvantage for VA borrowers in an already competitive market, the VA announced changes to address these issues on June 11, 2024 effective on August 10, 2024. Subject to VA guidelines, the changes include:

• Negotiation Flexibility: VA borrowers can now negotiate directly with their agents, as the VA has temporarily suspended the rule that prohibits them from paying a buyer's agent fee.
• Seller Contributions: Sellers can now contribute to the buyer's agent fee without it being counted toward seller concessions.

These measures aim to level the playing field for potential buyers using VA loans, ensuring they have fair access to representation and opportunities in the housing market. By adapting to these changes, real estate agents can better serve their VA borrower clients and help them navigate the new landscape effectively.