Don’t ‘free solo’ fiduciary duty: A warning on AI and private listings

As I sit here, scared to ride elevators and terrified to fly in airplanes, there is a man scaling Yosemite’s El Capitan … without a rope.

Professional rock climber Alex Honnold’s insane climb — 3,000 feet up a sheer granite wall — was captured in the 2018 documentary Free Solo, chronicling his historic ascent of El Capitan without ropes or protective equipment. With no Plan B, quite literally.

And while I am still reeling from a feat that took place nine years ago, Honnold continues to make headlines for climbing things that most of us would prefer to admire safely from the ground.

Who knew free soloing was even a thing? I didn’t, but I have been thinking about it ever since.

What does a free solo in real estate look like?

As a former DRE investigator, and now as a compliance consultant and expert witness, I could give you plenty of examples — enough regulatory free solos to scale El Capitan several times over.

But let’s not look backward. When I peer out at the evolving landscape of real estate, I see two places where this industry seems increasingly tempted to free solo.

(Summer, stop dancing and tell us already. OK, fine!)

The use of artificial intelligence and private listing networks.

Listen, I have been writing this article in my head all week. Here is roughly how that went.

Monday: Free Solo

I watched the movie, gasping several times and even covering my eyes. As my pulse raced, I couldn’t help but interrogate Honnold’s life choices.

Then I started questioning ours. 

Tuesday: Free solos are everywhere

By Tuesday, I started seeing free solos everywhere.

• Sneezing while driving, for example. For two seconds, you surrender your fate to the universe.
• Nodding yes to a question you didn’t quite hear or understand.
• Karaoke with coworkers. (Especially if you have heard me sing.)

We all occasionally proceed without a rope, sometimes by accident, other times by design. But there is a critical difference between taking a risk when the consequences belong to you and taking one when someone else is hanging on the mountain with you.

Because in real estate, that someone else is your client.

Wednesday: The Ferrari

At Inman CEO Connect in San Diego last month, I told the CEOs in the room that AI is like a Ferrari in the driveway.

It is incredibly powerful, taking you places faster than you imagined. But the fact that the Ferrari can go 200 miles per hour doesn’t mean you should.

The technology changed. The road and traffic signs did not.

Licensing law still exists. So do advertising rules, fiduciary duties, broker supervision and agency law. Yet I worry that some in this industry are so enamored with what AI can do that we are forgetting to ask what it should do.

• Let an AI assistant communicate with consumers?
• Let it answer complicated questions?
• Let it interpret, advise or even negotiate?

The tech is new, yes, but fiduciary duty is not.

At some point, that Ferrari leaves the road. And suddenly, you are free soloing. Except the licensee or brokerage may not be the only one who falls.

The consumer can fall with you.

Thursday: Private listing networks

Every day, I check the California Department of Real Estate’s website.

Yes, every day. 

I keep waiting to see the first enforcement action involving AI in a real estate transaction — or the first case that squarely takes on the growing private-listing debate. Quite frankly, I would welcome a case that finally puts the debate to bed: Is there demonstrable public harm?

I haven’t seen any yet. But don’t worry, I will let you know.

Because private listing networks present a different version of the same free solo. The harness here, though, is fiduciary duty.

A seller hires a real estate professional. That professional owes duties to that seller. And the basic question should be: What marketing strategy actually serves this particular client’s interests?

Not the brokerage’s interests. It’s the seller’s. It’s always the seller’s.

Some sellers may affirmatively want a private listing, and there may be legitimate reasons for doing so. However, the moment a brokerage pushes a private-listing product because it benefits the brokerage, we are getting awfully close to the edge of that mountain. 

Fiduciary duty is not something you throw into the wind and hope it lands on the right side of the law. I have investigated too many cases and sat in too many courtrooms not to know how this story can end.

Friday: Don’t free solo in real estate

You know that feeling when you’re asleep — or just about — and suddenly your body jolts because, for one terrifying second, you think you’re falling off a cliff?

That’s my free solo, or as close as I ever want to get to one.

Now, at first glance, AI and private listing networks look like completely different beasts. They aren’t. Both are tests of what happens when innovation and competition collide head-on with the law and fiduciary duty.

AI asks whether we will allow technological capability to outrun legal responsibility. Private listing networks ask whether we will allow business strategy to outrun the duty owed to the client, and both tempt us with essentially the same proposition: We can probably do this.

Maybe.

But “we can probably do this” is not a compliance standard. It’s a free solo.

An AI-driven transaction may go spectacularly wrong. A seller may ask: Wait. Why wasn’t my home exposed to the entire market? Could I have gotten more?

And when those questions come, regulators, lawyers and consumers won’t give a damn about the Ferrari. They’ll ask whether the licensee fulfilled the duties owed to the client.

In real estate, it’s not just your life — or your interests — on that mountain. It’s your client’s.

So, sure. Innovate. Compete. Build the Ferrari. But before you start climbing, remember: You are allowed to take risks with your business. You are never allowed to free solo your fiduciary duty to your client.

Writer’s note: The opinions and recommendations expressed in this article are based on Summer Goralik’s experience as a real estate compliance consultant and former investigator for the California Department of Real Estate. They are provided for informational purposes only and should not be construed as legal advice. Readers should consult with their brokerage and/or qualified legal counsel in their jurisdiction for guidance on specific situations.