Generative AI distorts reality in US property listings, prompting regulatory scrutiny
As renters encounter misleading representations of space and amenities, jurisdictions such as California and New York are grappling with how to enforce disclosure laws and prevent deceptive advertising practices.
The integration of generative artificial intelligence into real estate marketing has intensified concerns regarding misleading property listings, with tenants reporting significant disparities between digital advertisements and the physical reality of rental units. Agents are increasingly utilising AI tools to digitally insert furniture, appliances, and structural features into property photographs, a practice that has evolved from a visualisation aid to a source of consumer deception.
Renters in major US markets have documented instances where AI-enhanced imagery has misrepresented the size and condition of apartments. Joyce, a New York resident, reported viewing a Manhattan studio that appeared spacious and renovated in online photos, only to find the actual unit was significantly smaller, lacked a fireplace, and featured a different kitchen sink and stove. Such discrepancies, including missing appliances and non-existent features, have led to accusations that agents are using technology to mask the poor condition of properties.
While some industry professionals argue that virtual staging helps clients envision renovation potential, others warn of the ethical implications. Bee, a Florida-based realtor, noted that virtual staging costs between $40 and $400 per image, a fraction of the cost of physical staging. She utilised tools such as Stuccco and BoxBrownie to demonstrate renovation possibilities to clients but distinguished this from using AI to alter active listings, stating that deceptive use could lead to legal consequences.
Regulatory responses to AI in real estate advertising remain fragmented across jurisdictions. California’s Altered Image Law mandates that advertisers disclose when AI has been used to alter or enhance property images. In contrast, New York’s recent legislation primarily targets synthetic performers, leaving a gap in specific mandates for AI-generated furniture, although the state secretary of state has previously warned that brokers are already prohibited from posting dishonest advertisements.
The proliferation of AI has also impacted property descriptions, with tenants noting repetitive phrasing such as “charming,” “cozy,” and “spa-like finishes,” suggesting automated generation. Madison, a Queens resident, observed that while pre-AI scams often involved posting photos of entirely different apartments, current tactics involve digitally adding furniture to real room photos, making the deception harder to detect without close scrutiny.
