There are quite a few potential liability issues for a realtor that make the personal asset protection afforded by an LLC indispensable. The most common lawsuit filed against real estate agents is misrepresenting a property to a buyer, although this is far from the only liability risk. Breach of fiduciary duty, fair housing law violations, false advertising, and other potential perils for realtors. In short, you should never operate a real estate company as an informal business entity.