What VA Buyers Need to Know About the NAR Commission Settlement

Working with a real estate agent is essential for Veteran and military homebuyers.

But touring homes and paying for an agent’s experience and expertise looks different now in the wake of a landmark court settlement involving the National Association of Realtors.

The settlement arose from lawsuits accusing NAR and several major brokerages of colluding to inflate agent commission rates. The lawsuits argued that by requiring sellers to offer a set commission to buyer's agents through home listings, NAR effectively reduced competition and kept commission rates artificially high.

The settlement includes a series of industry-wide changes, the most notable of which is the removal of blanket commission offers in MLS listings. This change is expected to increase transparency and competition in the real estate market. But it also places a new responsibility on buyers to negotiate these fees directly with their agent.

For VA buyers, this new landscape presents both opportunities and challenges. While the potential for lower commission rates could make homebuying more affordable, the need to directly negotiate and potentially pay these fees out of pocket introduces a new layer of complexity.

Here’s what prospective buyers need to know.

Sign Before You Shop

Moving forward, buyers who want to use a real estate agent should prepare to sign an agreement before they shop for houses and get under contract. These buyer agreements aren’t one-size-fits-all.

One option might be to sign what’s known as a touring agreement. These are limited in scope and might allow an agent to show you one or more homes over a brief window of time. These types of agreements usually don’t require payment or oblige you to work with any particular agent for the long term.

When you’re ready to start making offers on homes, you’ll likely need to sign a more expansive buyer agreement. This creates a formal legal relationship between you and your agent. Buyer agreements are typically exclusive, meaning you’re pledging to work with only that agent during your homebuying journey.

Some agreements offer more flexibility than others. At Veterans United Realty, for example, buyers aren’t always locked into an exclusive relationship with one agent.

Buyer agreements themselves aren’t new – some real estate brokerages and agents have required them for years. The big change is compensation.

Buyer’s Agent Compensation

For decades, home sellers basically covered the cost of the buyer’s real estate agent. For example, a seller would list their home and include a 6% commission to be split between the seller’s and buyer’s agents.

The NAR settlement effectively ends that practice. Homebuyers can still ask sellers to cover their agent fees (more on this later), but it’s no longer a given. Now, buyers have to negotiate compensation directly with agents and spell out in the agreement how much the agent will make and how the agent will get paid.

In some cases, agents might still charge a flat fee for their suite of services. In others, buyers might be able to negotiate a more piecemeal approach to pay for only a handful of specific needs.

Every agreement is different, but the bottom line is that real estate agents aren’t going to work for free. Buyers will now have to be prepared to pay for this service themselves if a home seller won’t bite.

Agent Fees & VA Loans

Until recently, VA buyers weren’t allowed to pay a real estate agent – period. These costs were among the relatively few unallowable fees in VA homebuying. In the wake of the NAR settlement, the VA loan program released an update to help ensure Veterans and service members don’t get left behind.

The VA issued temporary guidance over the summer allowing Veterans to pay real estate agent commissions when buying a home. The fee must be reasonable and customary for the Veteran's housing market.

VA buyers can also still ask sellers to pay this fee at closing. Having a seller pay the buyer's agent commission doesn't count against the VA's 4% cap on seller concessions.

The Loan Guaranty Program plans to develop permanent guidance about buyer-broker commissions in the coming months.

Why Agents Matter

Despite the changes brought by the NAR settlement, working with a real estate agent remains a key step for Veterans and military members looking to buy a home. A buyer's agent can offer invaluable support, from navigating local housing markets to negotiating the best possible terms.

Agents have access to the Multiple Listing Service (MLS), a comprehensive database of properties for sale. This access can give VA buyers a competitive edge, particularly in fast-moving markets where homes can sell quickly. Additionally, experienced agents often have insider knowledge and connections that can help Veterans find properties that meet their specific needs.

In addition, the negotiation skills of a seasoned agent are especially important in the current market environment. With the NAR settlement introducing more flexibility and variability in commission structures, having an expert advocate on their side can help Veterans ensure they