Temporary Easing of VA Restrictions

You may have heard me in one of my radio segments or read in one of my earlier Dominion Post columns, a few of the details pertaining to the news of the National Association of REALTORS®. For those who may not be up to speed, essentially, a lawsuit was filed in Missouri. The premise of the lawsuit has to do with a listing agent, who represents a seller, “cooperating” and therefore splitting the Real Estate commission with the buyer’s agent. That plaintiff / seller in Missouri took issue over the fact that a portion of the commission goes to the buyer’s agent, but my argument to that, is the buyer is the one funding the entire transaction! I won’t go down that particular rabbit hole in this column, but I do want to address the fact that the proposed settlement is causing other problems within the Real Estate industry.

One problem in particular, is the Department of Veterans Affairs, has had a policy for years restricting a veteran or service member from paying for certain expenses on their own, as they purchase a home. The intent was noble and simply a way of offering those who’ve served our country an added benefit toward making home ownership a reality.

Although the proposed settlement hasn’t been accurately reported, the National Association of REALTORS® nevertheless decided to lobby lawmakers so that veterans or service members weren’t prevented from paying for professional representation in the home buying process.  Fortunately, lawmakers and the VA agreed to temporarily suspend this restriction. This solves the problem for SOME!

Keep in mind that for home buyers, VA or others, it’s rather common to struggle in coming up with down payments, let alone a commission. If a listing agent is prevented from splitting this commission, it could lead to many buyers entering into a major financial transaction, against a seller who does have professional representation. Many of these buyers are first time buyers, others are going through trauma in their lives and can’t do this alone and I say again, they’re the ones funding the overall transaction! This could be setting up many Americans for failure!

We believe the proposed settlement will go into effect in mid-August, and those of us in the trenches are still learning and waiting for guidance on how to address the overall challenge. Be prepared as you enter into a Real Estate transaction, your REALTOR® may be required to have you sign a representation agreement at the beginning of the process. Some REALTORS® already require this, while others like to develop a rapport with clients and want to develop trust in both directions. So, if you encounter having to sign an agreement early on, please understand, this just may be the new way of conducting business whether we like it or not.

I’ll discuss this more in the upcoming weeks and months so that you better understand how it’ll affect you. We’re hoping for some creative solutions for home buyers so once I know more, I’ll share that with you.