Condos with filters? Real estate agents use AI to fake property photos, sparking legal concerns

Real estate agents are increasingly using AI-generated images to enhance property listings, often creating misleading representations of homes that can dramatically differ from reality. The practice has sparked outrage from prospective buyers and raised legal concerns about false advertising in an industry already struggling with trust issues.

What you should know: The Register, a UK technology publication, uncovered a property listing featuring an AI-generated image that showed structural elements and landscaping that didn’t exist in the actual home.

• The manipulated photo included misaligned awnings, hedges that morphed into walls, and a flowerbed blocking a neighboring door that wasn’t present in reality.
• The real version revealed a tiled awning, clear pathways, and an adjoining hair salon that had been entirely removed from the AI version.
• The listing even confused basic structural elements, including the placement of toilets in bathrooms.

The big picture: This represents an evolution from traditional virtual staging, where real estate agencies would digitally add furniture to empty rooms, to completely fabricating architectural features and surroundings.

• McKinsey & Company, a global consulting firm, predicted in 2023 that generative AI could “generate $110 billion to $180 billion or more in value for the real estate industry.”
• An entire cottage industry has emerged offering “AI-powered virtual staging” and real estate “photo editing” services.

Legal concerns: Experts warn that AI manipulation of property images could violate existing consumer protection laws.

• “For me, the use of AI for imagery in property listings is a major red flag aligned to what was previously covered by the Property Misdescriptions Act,” Adrian Tagg, a University of Reading associate professor, told The Register.
• Building surveyors are “bound by regulations to deliver evidence-based opinion and hold a duty of care to deliver correct, appropriate advice,” while “estate agency has never really had this professional duty.”

What buyers are saying: Prospective homeowners have expressed fury over the deceptive practices on social media platforms.

• “Using AI in listing photos should be illegal,” wrote one user in the FirstTimeHomeBuyer subreddit after discovering a Zillow listing with an AI-manipulated image that even got the house number wrong, showing “418” instead of 1026.

Why this matters: The trend highlights growing concerns about AI’s potential to mislead consumers in high-stakes financial decisions, where “entire livelihoods are being put on the line in the pursuit of buying one’s dream home.”