AI-altered real estate photographs are a growing trend in housing markets. These are photos that are modified or even completely generated using artificial intelligence (AI) tools to change the interior, exterior, or surroundings of a home.
AI tools now allow for the addition of items to homes, such as virtual fireplaces as well as making changes, including paint colors, clearing out clutter, and erasing damaged floors. There is a new trend in the housing market, referred to as housefishing, where sellers use AI, trick photography, or heavy editing, to make the property look much more appealing online than it does in person.
Housefishing is a form of real estate fraud sellers are currently using to try and make their properties look better and waste the time of buyers who notice the issue when they go look at the property in person. The name of these real estate scams is a play on the term catfishing, where someone fakes their personal identity.
These issues are also creating new challenges for home buyers, and leading to stricter regulations under real estate law.
What Are Some Common Examples of AI-Altered Real Estate Photos?
There are several common examples of ways that photos and videos are AI-altered for real estate purposes, which may include, but are not limited to:
- Material Changes: This may include upgrading countertops, changing wall paint colors, and digitally replacing flooring.
- Virtual Staging: This can include adding digital decor, furniture, or rugs to an empty room.
- Structural Fabrications: AI can add a non-existent fireplace, expand a room size, reshape windows, remove neighboring structures, and fake lush landscaping.
- Cosmetic Enhancements: Changes can be made, such as changing grey skies to sunny, adjusting the brightness, and removing temporary clutter, such as children’s toys.
It is important to be aware that using AI to enhance real estate photos is acceptable for certain basic cosmetic changes. This is called virtual staging and is allowed, so long as it does not misrepresent any material facts.
Virtual staging may be used to add virtual furniture to a room to help visualize a space. AI can also be used to brighten the skies, adjust poor lighting, and clear up temporary clutter, such as trash. AI may also be used to clean up a messy yard, so long as the structure is not changed.
When Do AI-Altered Photos Become a Legal Problem?
AI-altered photos in real estate can become a legal issue in several different scenarios. These edits can create false expectations, which result in major in-person discrepancies between what is shown in a listing when the actual property is smaller, more worn, or cluttered.
As a result of these issues, some states, such as California, are implementing new laws to help combat these issues. California AB 723 now requires real estate agents, brokers, salespersons, and any person involved in a sale to disclose digital alterations to photos and to provide access to the original and unedited photos.
Is it a Requirement to Disclose Whether Real Estate Photos Are Digitally Altered or Generated by AI?
Whether or not there is a requirement to disclose if real estate photos are digitally altered or generated by AI will depend on the jurisdiction and the listing service rules. Many markets as well as local Multiple Listing Service (MLS) rules require the disclosure of significant digital or AI alternations that change the way a property appears.
Disclosure is required any time a material change is made that removes, adds, or changes any permanent structural or environmental features, such as changing wall colors or removing neighboring buildings.
Additionally, Article 12 of the Code of Ethics of the National Association of Realtors (NAR) prohibits misleading advertising. This applies to heavily edited or deceptive images of real estate properties.
Disclosure of digital or AI editing may not be required when changes are made that do not misrepresent the physical condition of a property. This can include making adjustments to the white balance, cropping the photo, adjusting the contrast, or sharpening the photo.
What Are Some Legal Issues Associated with AI-Altered Real Estate Photos?
There may be various legal issues associated with AI-altered real estate photos, such as fraudulent misrepresentation, copyright ambiguity, and violating state disclosure laws.
Fraudulent Misrepresentation
Altered photos may be considered fraudulent misrepresentation when it is used to hide property defects, such as cracks, water stains, or structural damage. Housefishing, such as changing room layouts, adding non-existent landscaping, or altering permanent structures can mislead potential buyers about the condition of the property.
When someone buys a home based on altered photos, they may be able to file a real property lawsuit or AI lawsuit against sellers or agents for misrepresentation, fraud, or breach of contract.
Copyright and Intellectual Property Issues
U.S. copyright laws provide that AI-generated images cannot be copyrighted because they are created without human input. This means that no one person legally owns the rights to the AI-generated image.
Removal of AI platform watermarks or logos can violate the Digital Millennium Copyright Act (DMCA) or service agreements.
Violation of Disclosure Laws and Ethics Violations
AI or digitally altered photos can violate state disclosure laws, depending on the location and the requirements of the state. As discussed above, new laws are being implemented and are set to go into effect.
Because of this, it is important to consult with an AI disputes lawyer for the most up-to-date information on what laws apply. Lawyers can also answer any other related questions, such as “What is a real estate agency?”
As noted above, the NAR prohibits misleading advertising and misrepresentation of property facts. There are many MLS that ban removing permanent fixtures or using deceptive enhancements, which can result in fines or license suspension for real estate agents.
Lastly, AI-altered real estate photos may constitute a violation of a real estate listing agreement, depending on the terms of the agreement.
How Can I Identify AI-Altered Real Estate Photos?
There are ways that AI-altered real estate photos can be identified, such as by visual distortions. This may include impossible lighting, floating furniture, or warped trim.
There may also be oddly scaled furniture, smudged details, or repeating textures in things such as walls or lawns. Another clue can be if shadows fall in different directions of an outdoor view does not match a room’s window light source.
An individual can try to determine if photos have been altered by comparing the current listing photos with older archived listing photos along with street mapping or satellite views to look for removed power lines or altered landscaping.
Photos can also be run through a digital content checker to look for Content Credentials or embedded C2PA that may reveal edit histories. Potential buyers can also reach out to the listing agent and ask directly if the photos were edited and, if so, if they can have the original photos or an unedited video walkthrough.
How to Report AI-Altered Real Estate Photos
An individual can report misleading or AI-altered real estate photos in several ways. A complaint may be submitted directly to the local MLS where the property is located by submitting a code-of-ethics or misrepresentation complaint regarding false advertising.
An individual can also contact the brokerage firm that represented the listing and provide the principal broker with evidence of the digital alteration. If the digital alteration conceals material damage or a structural defect, an individual can report an agent to the state real estate licensing board for deceptive trade practices.
Potential buyers can also use the feedback and report listing buttons directly on the property listing websites to alter moderators on the platforms to listings that are not accurate.
How Can an Attorney Help Me if I’ve Been Affected By AI-Altered Real Estate Photos?
There are many ways a real estate lawyer can help if you have been affected by AI-altered real estate photos, including evaluating whether a digital alteration constitutes misleading advertising or fraudulent concealment. An attorney can also review any purchase agreements, seller disclosures and MLS marketing materials for statutory violations or contract breaches.
If you need to file a complaint, your lawyer can help clients file regulatory complaints with their state real estate commission or local MLS against the agent or broker.
If you have suffered monetary losses because the property you purchased was materially misrepresented, your lawyer can help you get compensation by filing a lawsuit for breach of contract, fraud, or misrepresentation. If you suffered any losses for repair costs of hidden structural defects, your lawyer can help you recover those costs or try to rescind the transaction entirely.
If you are a real estate agent or broker accused of misrepresentation, your attorney can help defend you against any claims and preserve your license.
Should I Hire a Lawyer for Help with AI-Altered Real Estate Photos Issues?
Yes, it is very important to consult with a local real estate lawyer for any questions or issues you have related to AI-altered real estate photos. Your lawyer can help you determine if you were a victim of misrepresentation of fraud as a buyer. If you are an agent or broker, your attorney can defend you if you are facing accusations of fraud.
