VA Home Loan Benefits Updated Due to Lawsuit Settlement

Big changes took place last year that directly impact how veterans and service members utilize their VA benefits — especially when it comes to buying a home. As we move through spring and into summer 2025, it’s important to stay informed about how these shifts could affect you. Here’s a quick overview and reminder to help you navigate the evolving landscape.

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The Headline: Changes in Real Estate Industry Affect VA Home Loans

Recently, the National Association of Realtors (NAR) reached a settlement in a class action lawsuit that changes how real estate commissions work. Effective August 17, 2024, the way buyers’ agents are compensated has shifted — and it could directly impact veterans using their VA loan benefits.

Overview of the Changes

• No More MLS Compensation Offers: Agents can no longer advertise buyers’ agent compensation on the Multiple Listing Service (MLS). Previously, sellers offered a set commission to incentivize buyer’s agents to show their homes — that’s no longer allowed.
• Written Agreements Required: Buyers must now sign a written agreement with a real estate agent before touring homes. This agreement must clearly outline the agent’s fees and services.

Impact on Veterans Using VA Home Loans

Historically, VA rules prohibited veterans from directly paying buyer broker fees when purchasing a home. This protected veterans from additional out-of-pocket costs. However, with the industry changes, the VA updated its policies in June 2024 to keep veterans competitive in the housing market.

Now, eligible veterans, active-duty service members, and surviving spouses using a VA home loan can pay buyer broker fees if necessary.

Key Details Veterans Need to Know

When working with an agent, veterans should be aware of the following:

• Fee Disclosure: Agreements must disclose the exact amount or method (flat fee, percentage, or hourly rate) of the agent’s compensation.
• Compensation Limits: Agents cannot receive more compensation than what is agreed upon with the buyer.
• Negotiable Fees: All agent fees are fully negotiable and must be discussed upfront.

Handling Buyer Agent Fees

Veterans have a few options to handle buyer’s agent fees:

• Negotiate seller concessions to cover the agent’s commission (up to 4% of the appraised value).
• Pay the buyer’s agent fee out-of-pocket if concessions aren’t possible.
• Work directly with the listing agent in certain situations (rules vary by state).

Impact on Home Sellers

While sellers can still offer compensation to buyer’s brokers, they cannot advertise it via MLS listings. Instead, any seller-paid incentives must be disclosed separately or through alternative advertising like flyers or social media.

Additionally, sellers can offer veterans up to 4% of the home’s appraised value as a concession to cover closing costs and other allowable expenses.

Veterans’ Next Steps

When choosing a real estate agent, veterans should:

• Discuss and negotiate agent fees upfront.
• Ensure any written agreement clearly spells out compensation terms and services provided.
• Work closely with their VA-approved lender to understand how loan benefits apply under the new rules.

For specialized advice, veterans are encouraged to reach out to experts like David Patech from VA Housing Education, who can provide guidance on navigating these changes successfully.

The VA remains committed to protecting veterans’ interests and ensuring access to homeownership remains within reach. They will continue to monitor the real estate landscape and make updates as necessary to support veteran buyers.

Disclaimer: The information provided in this article is for general educational purposes only and should not be considered legal, financial, or real estate advice. Please consult with qualified real estate professionals, lenders, or legal advisors in your area to obtain specific advice tailored to your situation. VeteransBenefitsHub.com is not affiliated with the Department of Veterans Affairs or any government agency.