Hot Topics in Broker Risk Reduction

REALTOR® is not a general word for anyone who sells real estate. It is a membership mark that identifies members of the National Association of REALTORS® who agree to follow NAR’s Code of Ethics.

That distinction matters for brokers because the word REALTOR® often appears in listing materials, websites, bios, ads, social media posts, recruiting materials, and press statements; it also matters to the individuals who hold themselves out as REALTORS® in their communities because it signifies professionalism and competence. Moreover, the National Association of REALTORS® has invested a great deal of time, money, and effort in creating and registering its marks and the goodwill they represent.

If REALTOR® is used too broadly—like calling every real estate licensee a “realtor” or describing anyone who works in commercial real estate as a “commercial REALTOR®”—it could confuse consumers and end up weakening the mark. If you do not think it can happen, ask the shareholders of Aspirin, Thermos, Zipper, Escalator, or Trampoline!

For brokers, this is both a brand issue and a risk-management issue. Clear, accurate usage of NAR’s marks helps avoid misleading statements, protects professional credibility, and reduces the chance that marketing or staff communications will need to be corrected later.

Real estate brokers should pay close attention to how agents, teams, vendors, and lead-generation partners contact consumers by phone or text. A recent class action lawsuit against a brokerage shows that a broker may face Telephone Consumer Protection Act (TCPA) risk even when agents or third parties made the calls or texts. The key issue is whether the brokerage was involved enough in the outreach, benefited from it, appeared to authorize it, or later treated the callers as acting on the brokerage’s behalf.

The TCPA is a federal law that limits certain telemarketing calls, texts, prerecorded messages, and auto-dialed communications. It also restricts calls to people listed on the National Do-Not-Call Registry. Some states have adopted their own “mini-TCPA” laws, which may add extra rules depending on where the consumer is located or what phone number is used.

This matters because TCPA claims are often filed as class actions. Statutory damages in connection with successful class actions can be significant, especially when one calling campaign reaches hundreds or thousands of people. A few poorly managed calls or texts can become a major lawsuit if consumers say they did not consent, had opted out, or were on a do-not-call list.

For brokers, the practical lesson is simple: independent contractor status is not a complete shield. If agents use the brokerage name, appear on the brokerage website, follow brokerage-approved scripts, use shared lead tools, or rely on vendors tied to the brokerage, a plaintiff may argue that the brokerage is responsible. Brokers should treat phone and text marketing as a firmwide compliance issue, not just an individual agent choice.

A power of attorney, or POA, lets one person sign documents and make decisions for another person. In a real estate transaction, a POA may be needed when a buyer or seller cannot attend closing because of illness, travel, military service, relocation, scheduling issues, or another practical obstacle. Used correctly, a POA can help a transaction move forward when the parties are not physically available.

For brokers and agents, the concern grows when the client asks the real estate agent to be the person named in the POA. Agents naturally want to help clients, solve problems, and keep deals on track. But signing for a client is not just an administrative favor or a customer-service gesture. It can put the agent in a position of legal responsibility and may create duties beyond the agent’s normal role in the transaction.

That added role can create serious problems. A client may later claim the agent signed the wrong document, misunderstood the client’s instructions, missed a critical issue, or acted while facing a conflict of interest because the agent was earning a commission from the deal. Even if the agent acted in good faith, the situation can create questions about whether the agent crossed the line from helping with the transaction into making decisions for the client.

A POA can also raise practical closing concerns. Lenders, title companies, settlement providers, and recording offices may have their own requirements. Some may require advance review, specific wording, notarization, witnesses, original documents, or approval before closing. If those requirements are not handled early, the POA may be rejected or questioned at the last minute, causing delays, extra work, or even a failed closing.

The key point is simple: a POA can be useful, but it should be managed with care. Brokers and agents should not treat it as a routine shortcut. The decision to use a POA, and especially to name the agent as the authorized signer, should be reviewed before closing and with the right guidance.

POA Points to Consider:

• Talk with your broker and legal counsel before agreeing to serve
  • Confirm whether company policy, state law, licensing rules, ethics rules, or insurance coverage limits apply
• Whenever possible, encourage the client to choose someone else, such as a trusted family member, advisor, or attorney
  • Ask the title company, lender, and settlement provider whether the POA will be accepted and whether special forms, original signatures, or advance approval are required
• If you decide to accept an appointment as POA --
  • Get clear written instructions
  • Keep detailed records
  • Stay within clear authority
  • DO NOT MAKE LEGAL, FINANCIAL, OR BUSINESS DECISIONS FOR THE CLIENT. IF IN DOUBT, ASK FOR GUIDANCE BEFORE SIGNING.

For protection against costly antitrust claims and in service to the public in their homeownership journey, brokers and agents must understand the principles of antitrust law. Recall brokers may be held liable for the anticompetitive behavior of their salespeople and staff, so having an antitrust compliance program in place to educate and train staff is important. Business decisions should always be made unilaterally and independently, and never as a result of an agreement, understanding or conspiracy among competitors. Any agreement to fix prices is prohibited, and real estate professionals should never agree, expressly or implicitly, with their competitors about matters such as the compensation rate charged to consumers or the cooperative compensation they will offer to cooperating brokers. Similarly, brokers should never agree with other competitors to refuse to deal–or to only deal on certain terms–with another competitor or business. Avoid discussions with competitors about how to do business with other competitors altogether.

The Federal Department of Housing and Urban Development recently stated brokers may share information with buyers about neighborhood crime rates and school quality without automatically violating the Fair Housing Act. The key is to provide the information in the same way to all clients and without any intent to steer buyers toward or away from an area based on race, national origin, religion, or another protected characteristic.

Brokers should stick to objective facts from reliable sources and avoid offering opinions, repeating rumors, or sharing coded comments about whether an area is “safe” or whether a school is “good.” All clients should receive the same type of information in response to comparable questions and be encouraged to review the data and make their own decisions.

Agentic Artificial Intelligence represents the next evolution of artificial intelligence, moving beyond generating content to independently performing tasks and executing workflows without human intervention. For real estate brokers, this technology can improve productivity, increase consistency, and enable the creation of customized tools that streamline daily operations. However, its growing capabilities also introduce significant operational, legal, and compliance risks.

AI may act on outdated, incomplete, or non-compliant data, increasing the likelihood of MLS rule violations because those rules are not easily interpreted by AI systems. Automated communications and recommendations can also unintentionally create discriminatory patterns, exposing brokerages to fair housing liability. In addition, AI-generated marketing materials may contain inaccurate information, unauthorized claims, missing disclaimers, or incorrect branding elements that could damage a brokerage's reputation. Another major concern is that agentic AI could perform activities requiring a real estate license, such as creating listings or providing professional advice, without appropriate human oversight.

Industry experts caution that these risks become especially serious when AI functions similarly to a licensed professional. Because many agents are already experimenting with AI tools, brokers should proactively establish formal AI governance policies that define appropriate uses, require human review of high-risk activities, and protect both clients and the brokerage.

Office exclusive listings, pre-marketing, and limited exposure options can be useful tools when they match a seller’s goals, but they must be managed carefully. Brokers help sellers understand tradeoffs, make informed choices, and stay within MLS rules.

An office exclusive listing is a seller-directed option that keeps the listing from being disseminated through the MLS and publicly marketed. The listing is filed with the MLS but it is not shared broadly through the MLS with participants and subscribers outside the listing firm. A seller may choose this option for privacy, health, safety, timing, or another reason that makes limited exposure more important than broad market exposure.

Pre-marketing and limited exposure options, where available locally, give sellers and brokers more flexibility before a full market launch. Examples may include Coming Soon statuses or delayed marketing options. These tools can help manage property preparation, build early interest, or control timing, but they still must follow the seller’s informed instructions and local MLS requirements.

When determining the best marketing option, it is imperative that the listing broker explain all options available to the seller, including how each aligns with the seller’s goals, the marketing strategy, and the seller’s best interest.

Immediate broad MLS exposure supports transparency, cooperation, access to inventory, fair-housing goals, and competitive opportunities for buyers and sellers. Pre-marketing and limited exposure can also be appropriate when the seller understands the benefits being forfeited, confirms the choice in writing, and the broker follows the applicable MLS process.