The U.S. Department of Veterans Affairs (VA) allows active-duty service members, and eligible surviving spouses to pay ‘reasonable and customary’ buyer’s agent commissions when purchasing a home. This change is especially important because in August 2024, the real estate industry shifted how real estate commissions are negotiated and paid.
What Did the VA Do?
The VA issued a temporary policy change through VA Circular 26-24-14, which can be found here. For the first time in many years, VA buyers are allowed to pay their own buyer’s agent or buyer-broker commission under specific rules. Before this change, VA policy strictly prohibited veterans from paying their own buyer’s agent fees. The previous rules are outlined here.
Under the new policy, VA buyers may pay a “reasonable and customary” buyer’s agent commission. However, the VA does not allow these commissions to be financed into the VA loan amount. The only cost that can be financed into a VA mortgage is the VA funding fee, explained here. Because of this, buyers must bring cash or verified assets to closing if they choose to pay their agent directly. Lenders are required to verify that the borrower has sufficient assets to pay this cost. More details are available here.
The updated rule also requires that the buyer and agent sign a buyer-broker agreement outlining the fee. That agreement must be included in the loan file, and the fee must be itemized on the Closing Disclosure. Further explanation can be found here.
Why did the VA make this change?
In 2024, a major class-action lawsuit resulted in a $418 million settlement involving the National Association of REALTORS®. After the settlement, Multiple Listing Services (MLSs) removed the standard practice of displaying buyer-agent commission offers from property listings. As a result, buyers and their agents now negotiate compensation separately. The VA wanted to ensure that veterans would remain competitive in this new system. More background is available here and in the VA’s own update summary.
Sellers are still permitted to pay the buyer’s agent commission. In many cases involving VA loans, seller-paid commissions may not count toward the VA’s 4% cap on seller concessions. Industry commentary on this can be found here.
While this temporary policy gives veterans more flexibility, it also presents challenges. The commission must be paid out of pocket, which increases the cash needed to close. This can create difficulties for first-time buyers or those without large savings. The VA describes the change as a temporary variance while it evaluates how the real estate industry evolves. More information can be found here.
For non-veteran home buyers, these broader changes in commission rules also affect how they hire and compensate real estate agents. Buyer agents and home buyers come to an agreement on the buyer agent compensation and have a signed buyer broker agreement. In many cases, sellers agree to cover the buyer’s agent fee as part of the sale price. In other cases, buyers may request seller credits, negotiate reduced fees, or work with lenders that offer more flexible programs.
Exclusive buyer’s agents, such as those within the National Association of Exclusive Buyer Agents (NAEBA), believe the VA’s approach is a step in the right direction. Allowing buyers to finance or include their agent’s fee within the mortgage—similar to how other closing costs are handled—would reduce the burden on buyers and eliminate scenarios where sellers become involved in a private negotiation between the buyer and their agent.
At the moment, most exclusive buyer’s agents are still finding that sellers agree to include reasonable buyer’s agent fees within the sale price. However, because of the new rules, the fee must now be written into the offer, which gives sellers an opportunity to negotiate the compensation of the buyer’s agent. This creates an uncomfortable and unfair situation for buyers. Buyers already indirectly pay the seller’s agent fee through the sale price, but they have no right to know what that fee is. Meanwhile, their own agent’s private fee becomes part of the negotiation.
Over time, policymakers and mortgage investors may revisit these rules. Many in the industry hope that conventional mortgage lenders, including Fannie Mae and Freddie Mac, will eventually permit reasonable buyer’s agent fees to be financed within the mortgage. This would relieve buyers of the need to pay their agent out of savings and reduce unnecessary seller interference.
Until then, buyers—especially first-time and moderate-income buyers—should work with an experienced buyer’s agent who understands the new rules and can help negotiate the buyer’s agent fee fairly and strategically. Exclusive buyer’s agents, who never represent sellers, are especially well-positioned to guide buyers through this evolving process.