The Department of Veterans Affairs (“VA”) issued VA Circular 26-24-14 on June 11, 2024, and more recently, VA Circular 26-24-14 Change 1 on August 5, 2024. Circular 26-24-14 announced a temporary local variance for charges related to real estate broker or agent (“buyer-broker”) compensation. Although VA’s regulations specify that a veteran cannot pay for real estate brokerage charges, under 38 C.F.R. §36.4313(d)(1)(ix), the Under Secretary for Benefits “may authorize, in advance, charges that are appropriate for veterans to pay as proper local variances.”
Circular 26-24-14 states that the VA will allow veterans to pay for certain buyer-broker charges under a temporary local variance, to allow veterans to stay competitive as buyers in the current real estate market. VA intends to create a permanent policy, through standard notice-and-comment rulemaking at a future date.
VA has authorized veterans to pay reasonable and customary amounts for any buyer-broker charges, including commissions and any other broker-related fees, subject to the following conditions:
- The veteran must be purchasing a home in an area where listing brokers are prohibited from setting buyer-broker compensation through multiple listing postings and buyer-broker compensation cannot be established by or flow through the listing broker.
- Buyer-broker charges cannot be included in the loan amount.
- Buyer-broker charges paid by the veteran must be considered in determining the veteran’s available liquid assets.
Additionally, the total amount of buyer-broker fees paid by the veteran must be recorded in section H (“Other”) on the Closing Disclosure. Circular 26-24-14 originally required the charges to appear in lines 1-3 of section H, but Change 1 to Circular 26-24-14, removed this line requirement, so that the fees can be included on any line in section H.
VA also notes that veterans should negotiate the amount of any fees to be paid to their buyer-broker and the temporary variance does not prevent the seller from paying for the veteran’s buyer-broker charges.
Circular 26-24-14 is effective on August 10, 2024, and is valid until rescinded.
