Real Estate Settlement Hurts Our Service Members

There will be a lot of fallout from the National Association of Realtors (NAR) settlement, but one of the most tragic is what we’re seeing with the VA Loan policy change.  The VA Loan benefit originated in 1944 after WWII as part of the GI Bill.  This allowed the vets and active service members of America’s Greatest Generation who were returning from war, to reacclimate to civilian life.  The program allowed them to purchase homes with low – or no – downpayment, competitive interest rates and no broker fees or commissions.

With the terms of the settlement, it will become more common for the seller not to offer a cooperative commission that would cover both the listing and the buyer’s agent.  Right off the bat, we knew this would create a huge problem for our vets who want to utilize this benefit.  If they can’t pay fees and commissions, and the seller isn’t offering to pay the buyer’s agent, what the heck do they do?

The Department of Veterans Affairs (VA) issued a temporary fix on Tuesday that will now allow veterans to pay broker fees and commissions.  Well, that’s just swell.  A benefit that has been available for 80 years is now all but gone. Although vets (and all other buyers) can ask the seller to pay the buyer’s agent commission, in this competitive market, it may make that offer less desirable. This change - temporary or not - resulting from the real estate settlement will hurt out service members by forcing them to come up with cash for closing costs.

One way America has shown our brave men and women of the armed services our appreciation for protecting our country has been to help them buy houses with as little upfront money as possible.  This policy will change that substantially.  Right now, they say it is just a temporary fix but I’m not sure how temporary it will be. Because of the settlement agreements, solutions that still allows them to be competitive are limited.  I hope that it’s not a benefit that is lost permanently.