When it comes to VA loans, recent changes have added a new layer of responsibility for real estate agents and buyers alike. If you're working with VA buyers, understanding the new requirements surrounding buyer agent compensation agreements is essential for ensuring a smooth transaction and avoiding delays. Let’s dive into what’s changed and how it impacts you.
New Requirement for VA Appraisals and Buyer Agent Agreement
In light of recent updates from the VA, a new guideline has been implemented that directly affects how agents and buyers handle the appraisal request process.
As of August 2024, VA appraisals now require the submission of the signed buyer agent compensation agreement when the appraisal order is placed, regardless of who is paying the buyer agent’s commission.
This change is a result of the National Association of Realtors (NAR) settlement, which altered longstanding practices around agent commissions.
Previously, VA buyers were not allowed to directly pay their agent’s fees. However, the VA has adjusted its policies to keep VA buyers competitive in the market by allowing them to pay reasonable and customary agent fees. In conjunction with these updates, it's crucial that the signed buyer agent agreement is on file with the appraisal request to avoid any holdups.
Why This Matters
Even though the buyer agent’s fee can still be covered by the seller or buyer, real estate agents must ensure that the compensation agreement is signed and submitted with the appraisal request upfront. This detail is not just a formality—it’s a requirement. Without the signed agreement, the appraisal will not proceed, which could potentially delay the entire transaction.
To illustrate: if a purchase contract specifies that either the buyer or seller is responsible for paying a portion (or all) of the agent’s commission, this agreement must still be included in the file when ordering the appraisal. The new VA guidelines don’t allow any flexibility here, so ensuring this document is in place at the right time is essential to keeping the transaction on track.
Potential Delays and Their Impact
Without the signed buyer agent agreement in the appraisal file, the VA appraisal cannot move forward. This can lead to a cascade of delays, adding frustration for buyers, sellers, and agents. VA appraisals already come with strict timelines, and missing documentation disrupts the process and risks pushing closing dates back.
Real estate agents must take proactive steps to ensure the buyer agent agreement is completed, signed, and submitted as early as possible—ideally, before the appraisal is even requested. By doing so, you help your VA buyers and sellers avoid unnecessary delays and keep the transaction moving forward.
How to Avoid Delays
To avoid any issues, agents should have the buyer agent compensation agreement ready before the appraisal order is placed. The simplest approach is to make this part of your standard process: have it signed alongside the purchase agreement, so it's available when needed.
Ensuring that this is handled early on not only prevents potential delays but also shows your VA buyers that you're on top of the process. This kind of attention to detail can make all the difference in today's competitive market.
Understanding the Bigger Picture
The change in VA appraisal requirements is tied to a broader shift in real estate practices. As part of the NAR settlement, buyers are now more likely to be responsible for negotiating agent fees, whereas sellers traditionally paid them. The VA made this adjustment to ensure that veterans aren’t disadvantaged by these shifts in commission structures. As agents, it’s important to understand how these changes affect your VA clients and adjust your processes accordingly.
Final Thoughts
In conclusion, the new VA appraisal requirement for a signed buyer agent compensation agreement is a crucial step that real estate agents must not overlook. Regardless of who is covering the fee—buyer or seller—this document needs to be submitted with the appraisal request. Missing this requirement can cause costly delays, so it’s essential to be proactive.
For more information or to connect with a VA Home Loan expert who knows the ins and outs of these new requirements, feel free to text or call me at 707-695-6313. You can also click on my calendar image to schedule a day and time that works best for you.
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