COLUMBUS, Ohio (WCMH) — Legislators are advancing a bill to change the way a home is sold in Ohio, after the leading national real estate trade group settled a series of lawsuits that could alter how agents are paid commissions.

House Bill 466 would require an agent who is representing a buyer or seller to have a written agreement with their client outlining their compensation. The legislation would require these agreements to be completed before showing a property for a seller or making an offer to purchase property for a buyer, said Rep. Jean Schmidt (R-Loveland), one of the bill’s primary sponsors.

“It is vital that Ohio establishes standards for these agreements so that both the real estate professional and the buyer have a transparent understanding of the services being provided, compensation and the responsibilities of both parties,” said Schmidt in testimony submitted for the legislation’s first hearing on April 9.

Schmidt’s proposal comes after the National Association of Realtors reached a settlement in March with home sellers who argued the current way commission prices are negotiated forced them to pay excessive fees. Now, the association is paying $418 million in damages and implementing a new rule banning a seller’s agent from offering to compensate a buyer’s agent through the Multiple Listing Service, a database of homes for sale.

Ohio Realtors, the state’s largest trade association with about 36,000 members, said the organization will follow the new rule set by NAR’s settlement, which could also amend the current practice of a home seller paying the commissions for both their agent and the buyer’s agent. Typically, if each agent receives a commission of 3% of the sales price, a seller would pay $12,000 — $6,000 to each agent — for their home that sold for $200,000.

Now, an agent who is representing a buyer will be required to have a written agreement with their client outlining their compensation, instead of relying on sellers to cover the cost. Ali Whitley, president of Ohio Realtors, said this practice has long been encouraged, as it helps consumers understand the services and value realtors provide.

“While the settlement does require written agreements for realtors representing buyers, it does not apply to all licensed real estate professionals,” said Whitley. “H.B. 466 is an effort to provide some clarity to the changing industry practices. By establishing a statewide standard for all licensed real estate professionals, we ensure everyone is operating under the same rules and guidelines.”

Columbus Realtors also announced that the organization will follow the new rules set by NAR’s settlement. Scott Hrabcak, president of Columbus Realtors, said the rules will be enacted in mid-July for the organization’s more than 9,000 central Ohio agents.

While the new process bans compensation offers from being communicated through the MLS, home sellers could still offer compensation to the buyer’s agent through negotiations with their agent, Columbus Realtors said.

Beth Wanless, Zillow’s Midwest government relations and public affairs manager, said in submitted testimony that the company strongly supports the timing requirement in the bill for entering into a written agreement. Wanless argued empowering consumers by clearly disclosing the compensation to be paid to an agent provides the opportunity for consumers to freely negotiate.

“Prior to entering such an agreement, a customer should have ample time to meet with various real estate agents, ask questions, tour properties, and most importantly have the privacy and time to review the contracts and understand exactly what they are signing.” said Wanless.

Additional hearings at the Statehouse will be held for H.B. 466 before the Ohio House votes on the measure.