What Veterans Need to Know About Buying a Home

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Veterans and active servicemembers often have unique needs when looking for a home, and REALTORS® are committed to helping ensure those needs continue to be met following the real estate practice changes that went into effect on August 17, 2024. Here is what you need to know:

I’d like to take advantage of my Department of Veteran Affairs (VA) Home Loan benefit. Am I allowed to pay for a REALTOR® under VA rules?

Yes. On August 10, 2024, the VA enacted a temporary policy allowing buyers with VA home loans to pay for REALTOR® representation.

Why is the policy only temporary?

The VA will decide if a formal rulemaking is necessary to make this policy permanent.

Why am I being asked to sign a written agreement?

Written buyer agreements lay out the services your REALTOR® will provide and what they will be paid for those services. The practice changes require written agreements for many REALTORS® nationwide. You are in the driver’s seat with these agreements, which are fully negotiable. You should not sign anything that includes terms you do not agree with or do not understand. For more information on written buyer agreements, click here.

How does my buyer’s agent get paid?

This is determined in your written buyer agreement. Methods of paying a buyer’s agent may include, but are not limited to, the seller or their listing broker offering to compensate the buyer’s agent, the buyer requesting that the seller pay the buyer broker as part of the purchase offer, or the buyer paying their agent directly out of pocket.

Why should veterans and active servicemembers work with a REALTOR®?

REALTORS® are obligated under NAR’s Code of Ethics to work in your best interest. Additionally, many REALTORS® have obtained NAR’s Military Relocation Professional (MRP) certification to better prepare them to work with veteran buyers. Find a REALTOR® who has earned the MRP certification here.

Open Houses & Written Agreements: What You Need to Know

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When you begin working with a REALTOR® and touring homes, you will be asked to sign a written buyer agreement. But what if you are just attending an open house? Here’s what you should know:

I am attending an open house without a REALTOR®. Do I need a written buyer agreement in order to tour the home?

No. If you are simply visiting an open house on your own or asking a REALTOR® about their services, you do not need to sign a written buyer agreement.

Is a REALTOR® who is hosting an open house required to enter into written agreements with the potential buyers who attend the open house?

No. In this case, since the REALTOR® is only there at the direction of the listing broker or seller, the REALTOR® is not required to have a written agreement with the buyers touring the home.

When will I be asked to sign an agreement with a REALTOR®?

After you begin “working with” a REALTOR® and at any point before you tour your first house together.

What does “working with” a REALTOR® mean?

A buyer is “working with” a REALTOR® as soon as the REALTOR® begins to provide services, such as identifying potential properties and arranging tours. REALTORS® who are simply marketing their services or speaking to a buyer—at an open house or by providing a buyer access to a house they have listed—are not considered to be working with the buyer.

What does it mean to “tour” a home?

Under the terms of the settlement, a “tour” is when a buyer who is working with a REALTOR® enters a home that is for sale or directs their REALTOR® to enter the home on their behalf. This includes when the buyer’s agent provides a live, virtual tour to a buyer not physically present.

What is the purpose of written buyer agreements?

Clarity and transparency. Written buyer agreements lay out the services your REALTOR® will provide and what they will be paid. Buyers should not sign anything that includes terms they do not agree with or do not understand. These agreements are fully negotiable.

Where can I learn more about buyer agreements?

Click here for everything you need to know.

Offers of Compensation: What You Need to Know

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As a home seller, you have a wide range of choices when deciding how to market your property. This includes whether you’d like to offer—or authorize your REALTOR® to offer—compensation to a buyer’s agent as a way to attract potential buyers. Here’s what you need to know as you consider your options related to offering compensation.

What is an offer of compensation and why make one?

An offer of compensation is when you—the seller—or your REALTOR® compensate another agent for bringing a buyer to successfully close the transaction. Offers of compensation help reduce out-of-pocket costs for prospective buyers, which in turn may bring more potential buyers for the transaction. These costs can be especially significant for first-time buyers, lower- to middle-income buyers or those from underserved communities.

Are offers of compensation mandatory?

No. It is up to you to determine if making an offer of compensation is the best approach for selling your property. REALTORS® are here to help answer your questions and guide you to make a decision that works for you.

As a seller, does my REALTOR® need my permission to offer compensation to a buyer’s agent?

Yes. Your REALTOR® can only offer compensation or make a payment to a buyer’s agent if they have your written approval and sign-off on the amount.

What types of compensation can I offer?

There are many options available to you as a seller to discuss with your REALTOR®. These could include a flat fee paid directly to the buyer’s agent or allowing your REALTOR® to share a part of their compensation with the buyer’s agent. Beyond compensation, you could also consider offering a buyer certain concessions, such as covering closing costs, to make the total home purchase more affordable for them.

How will a buyer’s agent know if there is an offer of compensation?

Offers of compensation can be advertised in many ways. If you approve an offer of compensation, it can be shared through common marketing methods such as flyers, signs, brokerage websites, social media posts or simply through a phone call or email. Offers of compensation cannot be listed on Multiple Listing Services (MLSs), online platforms that compile home listings from many different sources.

Do I have to advertise an offer of compensation if I decide to make one?

No, it’s up to you to decide. Advertising can help get the word out to bring more buyers to the table, but you can also choose not to advertise and instead negotiate the offer in a purchase agreement.

What are concessions?

A seller concession is different than an offer of compensation. It is when a seller covers certain costs associated with purchasing a home for the buyer. Concessions can make home ownership more accessible for buyers by reducing upfront expenses. These can cover things like some transaction costs or property repairs.

How do I know what option is best for me?

When you work with a REALTOR®, you are working with a professional guided by ethical duties under the REALTOR® Code of Ethics, including the pledge to protect and promote the interests of their clients. Your agent will work with you to weigh your options, answer questions and develop a strategy you are confident in.

Multiple Listing Services (MLSs): What You Need To Know

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When buying or selling a home, your REALTOR® will use a Multiple Listing Service (MLS) to find homes for sale or market your property. Here is what you need to know about them:

What is an MLS?

MLSs are online platforms that compile home listings from brokerages in a given market. They enable REALTORS® to see available homes for sale efficiently, get helpful marketplace data and share listing information to national and local websites that advertise properties. There are many MLSs across the U.S., and each has its own rules to make sure its information is complete, accurate and transparent.

What value does an MLS provide?

MLSs allow real estate professionals to see, share and promote homes for sale so the largest pool of potential buyers can find them. MLSs provide the most accurate, reliable and detailed information about properties (this includes properties that have been sold and are for sale), including listing price, address, features, disclosures and square footage. MLSs also help promote fair housing and equal opportunity by giving REALTORS® and their clients access to consistent information.

As a buyer, how can an MLS help me buy a home?

Using a Multiple Listing Service allows your agent to access many homes for sale and connect with REALTORS® working to sell their clients’ homes.

As a seller, how can an MLS help me sell my home?

MLSs are the most trusted source for real estate data because their information is verified by REALTORS®. Listing on an MLS will help a seller reach the largest pool of buyers and potentially attract the best offer.

Am I required to market my home through an MLS?

No. You should discuss the pros and cons with your REALTORS®. If you decide to have your REALTOR® not list your home on an MLS, you may be asked to sign a document verifying that you have made this choice.

Can I make an offer to compensate a buyer’s agent on an MLS?

An offer of compensation is when the seller or the seller’s agent offers to compensate another buyer’s agent for bringing a buyer to successfully close the home purchase. As of August 17, 2024, offers of compensation are no longer allowed on MLSs. However, offers of compensation can still be made off-MLS and shared through common marketing vehicles such as flyers, signs, emails or other communication mechanisms.

Can I offer concessions on an MLS?

To attract more buyers, sellers may offer concessions, which are certain costs associated with the buyer’s home purchase that a seller agrees to pay. MLSs may allow communications about a sellers’ concessions, but it depends on local rules.

How do I access Multiple Listing Service information?

Many MLSs share data with websites that consumers can access. If you are a buyer, your REALTOR® will provide you with MLS property listings that may meet your criteria. For both buyers and sellers, when you work with a REALTOR® who has access to an MLS, you can discuss how the MLS can benefit you. Remember, REALTORS® are guided by ethical duties under the Code of Ethics, including the pledge to protect and promote the interests of their clients. Your REALTOR® will help you to weigh your options and develop a strategy you are confident in.

Written Buyer Agreements: What You Need To Know

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When you begin working with a REALTOR® to buy a home, you will be asked to sign a written buyer agreement. Here’s what you need to know about these agreements:

What is a written buyer agreement and what does it do? 

A written buyer agreement is an agreement between you and your REALTOR® that outlines the services your REALTOR® will provide you, and what they will be paid for those services.

Why am I being asked to sign an agreement? 

Written buyer agreements became a nationwide requirement for many REALTOR® as a part of the National Association of REALTORS®’ proposed settlement of litigation related to broker commissions. The requirement went into effect on August 17, 2024.

Are these agreements new?

In some places, yes. Many states have required them for years, while some, including Illinois, have not. As a result, it is entirely possible you or others you know have not used them in the past. Regardless, they are now a nationwide requirement for many REALTORS®. 

Are these agreements negotiable? 

Yes. You should feel empowered to negotiate any aspect of the agreement with your REALTOR®, such as the services you want to receive, the length of the agreement and the compensation, if any. Compensation between you and your REALTOR® is negotiable and not set by law. In the written agreement, the compensation must be clearly defined (e.g., $0, X flat fee, X percent, X hourly rate), not open-ended or a range. It is important to sign only an agreement that reflects what you have agreed to with your REALTOR®. 

How do I benefit from these agreements? 

These agreements clearly lay out what services you, as a homebuyer, expect your REALTOR® to provide, and what your REALTOR® will be paid. These agreements make things clear and reduce any potential confusion at the outset of your relationship with your REALTOR®. 

When do I need to sign an agreement? 

You will be asked to enter into a written buyer agreement with your REALTOR® before touring a home with them, either in-person or virtually. If you are simply visiting an open house on your own or asking a REALTOR® about their services, you do not need to sign a written buyer agreement. 

Does this mean I have to pay my REALTOR® out of pocket? 

Not necessarily. While you are responsible for paying your REALTOR® what is outlined by your agreement, you can still request, negotiate for and receive compensation for your REALTOR® from the seller or their REALTOR®. 

Do agreements dictate a specific type of relationship I need to have with my REALTOR®? 

No—you are allowed to enter into any type of business relationship with your REALTOR® that is allowed in the state law where you live. 

Can I change or exit an agreement? 

Yes. You and your REALTOR® can mutually agree to change your agreement. Agreements may have specific conditions under which they can be exited, so read the text of the agreement and speak with your REALTOR® if you would like to change or exit your agreement.

Recent Related Posts

What Sellers Need To Know About the NAR Settlement

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Recently, the National Association of REALTORS® (NAR) reached a settlement agreement that will change the homebuying and selling process. While a REALTOR® will still be there to help you through the journey, here’s an overview of the changes that will go into effect on August 17.

As a seller, you still have the choice of offering compensation to buyer brokers. You may consider doing this as a way of marketing your home or making your listing more attractive to buyers.

When working with your REALTOR®, they must disclose and obtain your approval for any payment or offer of payment that a listing broker will make to another broker acting for buyers. This disclosure must be made to you in writing in advance of any payment or agreement to pay another broker acting for buyers, and must specify the amount or rate of such payment.

If you choose to approve an offer of compensation, there are changes to how this can happen. As a seller, you can still make an offer of compensation, but your REALTOR® cannot include it on a Multiple Listing Service (MLS)—MLSs are local marketplaces used by both buyer brokers and listing brokers to share information about properties for sale. Your REALTOR® can advertise your listing via off-MLS platforms such as social media, flyers and websites. And, as a seller, you can still offer buyer concessions on an MLS, like concessions for buyer closing costs.

To read more details about these changes, visit facts.realtor.

What Homebuyers Need to Know About NAR’s Settlement

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Recently, the National Association of REALTORS® (NAR) reached a settlement agreement that will change the homebuying and selling process. While a REALTOR® will still be there to help you through the journey, here’s an overview of the changes that will go into effect on August 17.

As a buyer, you will have to sign a written agreement with your REALTOR® before touring a home. Before signing this agreement, you should ensure it reflects the terms you have negotiated with your agent and that you understand exactly what services and value will be provided, and for how much.

Your buyer agreement must include the following four aspects surrounding compensation:

  1. A specific and conspicuous disclosure of the amount or rate of compensation the real estate agent will receive or how this amount will be determined.
  2. Compensation that is objective (e.g., $0, X flat fee, X percent, X hourly rate)—and not open-ended (e.g., cannot be “buyer broker compensation shall be whatever the amount the seller is offering to the buyer”).
  3. A term that prohibits the agent from receiving compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer; and,
  4. A conspicuous statement that broker fees and commissions are fully negotiable and not set by law.

These written agreements apply to in-person and virtual home tours. However, if you are only speaking to an agent at an open house or discussing their services with them, no written agreement is necessary.

Sellers may still agree to offer compensation to your agent. This practice is permitted but the offer cannot be shared on a Multiple Listing Service (MLS)— MLSs are local marketplaces used by both buyer brokers and listing brokers to share information about properties for sale. Also, you can still accept concessions from the seller, such as offers to pay your closing costs.

To read more details about these changes, visit facts.realtor.

What To Know: Transitioning from Renting to Buying

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It’s time. You’re ready to move on from following your landlord’s rules and ready to purchase a place you can call home. Follow these steps to make transitioning from renting to buying as easy as possible.

Consider Your Financial Situation

While buying a home may be a better way to build wealth, buying a home is a big financial decision. Take the time to consider your goals and plans for the future, and ask yourself some of the following questions

  • How will my finances look different if I buy as opposed to rent?
  • Do I have the means to maintain a home and the repairs that come with it?
  • Will I be able to make monthly mortgage payments?

Understand the Full Cost of Owning A Home

When you purchase a home, you need to pay more than just your principal and interest rates. Also lumped into your mortgage payment is what’s known as PITI:  principal, interest, taxes and insurance.

You’ll also need to consider the extra costs associated with owning a home, including your down payment and closing costs when you first purchase your home, as well as other monthly payments like utilities and other maintenance needs.

Get Your Homebuying Team Together

When you’ve determined that you’re ready to buy, it’s time to put together your homebuying team who will help guide you through the transaction with ease. This includes a REALTOR®, lender, attorney and inspector. Click here for more details on these individual’s roles during the homebuying process.

Start Your Search

We’ve gathered five easy steps to follow in the beginning stages of the home buying process to make the journey to your new home as easy and seamless as possible. This includes creating a plan, researching, finding a REALTOR®, choosing a loan and getting pre-approved. Get more information on these important steps here.

What To Know About A Home Warranty

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Home warranties can help you save money on appliance repairs and maintenance of your home, but they may not be right for everyone. So, if you’ve just bought a home, and are debating whether a home warranty is right for you, here’s what you need to know.

The Difference Between Insurance & Warranties

You may think that you’re covered because you have home insurance, but a warranty is a separate entity. Homeowners insurance covers unforeseen damage to your home, specifically weather related incidences, while warranties cover things breaking down within your home, like the HVAC, kitchen appliances, garbage disposals, washers and dryers and more.

How It Works

Once you sign up for a home warranty, if something breaks down, you will submit a claim to your provider. From there, the provider will set you up with a repair company, who will contact you to set up an appointment. The repair or replacement will take place, and you will cover either the service fee or repair, whichever is less.

Benefits of A Home Warranty

A home warranty provides you with piece of mind, especially for those who don’t consider themselves handy. When something breaks, you know someone will be there to fix it for you. A home warranty can also help you stay on budget, as there are fewer unanticipated costs that may arise.

The Cons of A Home Warranty

Not everything is covered by a home warranty plan. For instance, a warranty won’t cover something that has not been properly maintained. Also, you pay up front for the cost of your plan each year. So, if a year goes by with no issues or repairs, you will still have to pay the price of the premium.

As always, discuss your best course of action with your REALTOR®. Find a Chicago REALTOR here.

Navigating the Offer Process

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The time has come to let go of your current home, and congratulations, you got an offer from a prospective buyer! Now, the question is, what should you take into consideration when looking at an offer? Here’s what you and your REALTOR® should look at when deciding whether to accept or reject an offer, because the highest offer may not be the best choice.

The Earnest Money Deposit

An earnest money deposit is the money a buyer is offering to pay when the sales agreement is signed. This money, which is usually 1-3% of the house’s cost, gets held by the title company and put towards the buyer’s down payment during closing. If a buyer tries to back out of a sale without reason, this money is given to the seller. So, the higher the earnest money deposit, the more serious a buyer is about buying a home.

Contingencies

Contingency agreements must go through before a home is sold. The fewer contingencies, the quicker a home sale will be complete. There are five common contingencies, including:

  • Home inspection
  • Appraisal
  • Financing
  • Sale of current home
  • Title

While an appraisal contingency is required to approve a loan, you can talk with your REALTOR to determine if you’d like to negotiate any of the other contingencies.

Cash Offers

The more a buyer puts down for a home, the more likely a lender will approve their loan. Cash offers typically lead to quicker closings, as a mortgage lender doesn’t need to be involved, there’s less risk of the offer not panning out and appraisals aren’t necessary.

Closing Date

A typical home sale, from offer to closing, takes between 30 to 60 days. Your circumstances, combined with the seller’s, may determine what offer you take. For instance, if you already purchased a new home, you may be looking for a buyer who can close quicker.

As always, your REALTOR® will be able to guide you through the selling process. If you’re thinking about buying or selling, start your REALTOR® search here.