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Weary homebuyers have a new headache: Misleading AI listing photos

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The photos carry uncanny similarities: Suspiciously smooth exteriors. Artificial green grass. Distorted, melting lines surrounding doors or windows. Occasionally, nonexistent lights might appear.

To hear the homebuyers of today tell it, any of the above can be signs of heavy-handed AI-edited real estate listing photos. Such tweaks — and the ordeal of sorting out what’s real and what’s not — have emerged as a new challenge in the already daunting homebuying process.

Today, AI editing tools can make it easier than ever to virtually stage homes — and go even further by cleaning up the appearance of aging exteriors or projecting rosy visions of what a fixer-upper might look like after a pricy gut renovation. The tools are new enough that only a patchwork of rules and regulations — often put in place by local real estate boards or multiple listing services — exist to govern their use.

In this Wild West moment, the most egregious examples often end up going viral on social media, alongside stories of time wasted touring homes that didn’t look like the photos. In other words, buyers are finding they’ve been “housefished,” a play on the popular television show “Catfish,” about internet relationships that may not be as they seem.

Megan Kolstad, a real estate agent with The Hive in St. Paul, Minnesota, recently toured a home in the city with a client, only to discover that AI images in the listing had added a nonexistent window in a bedroom.

“That felt misleading,” Kolstad said. “When we got to the property, it was just a lot of comparing the photos we were seeing online to what we were experiencing in real life, and I don’t feel like that’s the best use of our time.”

Kolstad isn’t opposed to all uses of AI in listing photos. She thinks virtual staging can help buyers imagine what an empty space looks like furnished, though she’s also encountered instances where that goes too far, like when an eight-person sectional backs up to a medium-size window, suggesting some impossible furniture Tetris.

“Realistically, a couch of that size isn’t going to fit in that space,” she said.

Sonia Rodriguez, a Realtor with the Redux Group in Northern Virginia, found herself duped by virtual staging when she stopped to preview a listing for a client. She was prepared to show up to an empty home, but instead found a mess of the existing occupant’s belongings and markedly different lighting. She didn’t bother bringing her client back for a tour.

“I went to go preview it, and I was like, ‘Oh, this is a no,” Rodriguez said. She was glad to have a chance to look at the listing before her client.

“We would have both walked into a surprise,” she said.

The National Association of Realtors, the trade association for the real estate industry, says it “supports responsible AI use in real estate.” In 2022, the group said there are ethical ways to use AI-generated photos but cautioned its members to consider the Realtor Code of Ethics, which tells them to “refrain from exaggerating, misrepresenting, or concealing pertinent facts related to a property or to a transaction.”

For now, some brokerages are also developing their own policies. Both Rodriguez and Kolstad said they’re advised to clearly label all photos that are virtually staged.

States are also beginning to pay closer attention to the issue. Last month, the New York Department of State issued a warning to homebuyers and real estate agents regarding “a significant rise in artificially generated pictures on real estate listings” that could run afoul of its deceptive advertising rules. It encouraged prospective buyers who felt they had been misled to file a complaint with the state.

And starting Jan. 1, a new law in California will require real estate agents to disclose when they’ve posted digitally altered images, and also include unaltered versions of the photos online.

Nathan Cool, who has been a full-time real estate photographer in the state for 15 years, said he generally supports the law. Certain AI tools, including many in the most recent versions of Photoshop, can make routine photo editing faster and easier. He’s also seen the latest generative AI technologies go too far and potentially run afoul of truth-in-advertising laws.

“The red flags came along where it’s like, ‘wait a minute,’ Cool said. “This is starting to change the structure. Walls are longer. Windows could be bigger. You might have an added corner — it could hallucinate and add things. That became very risky.”

Read more: Housing market predictions for 2026: What buyers, renters, and homeowners can expect

Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.

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