With the rise of artificial intelligence (AI) in real estate, it has become essential for realtors to understand the potential risks and responsibilities associated with using AI tools. This article will focus on how real estate agents can navigate these challenges, especially regarding virtual staging—a tool that is becoming increasingly popular but comes with its own set of legal considerations. This is particularly important as recent cases, including one involving a Kelowna realtor, have shown that failing to disclose AI usage in property images can lead to fines.

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The Rise of AI in Real Estate

AI tools, including generative AI, are now being used to enhance property listings, improve customer interactions, and streamline administrative tasks. Generative AI systems like ChatGPT, Google Bard, and image-processing tools enable realtors to create property descriptions, market trends reports, and even enhance photos to virtually stage properties. However, while these tools offer convenience, it is critical for real estate professionals to maintain transparency, accuracy, and ethical practices.

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Virtual Staging: Opportunities and Legal Considerations

Virtual staging involves digitally enhancing property images, such as adding furniture or updating décor, to make a home more appealing to potential buyers. This technique is legal and a powerful tool for realtors, but it must be used with transparency. Failure to disclose the use of virtual staging can lead to fines and legal issues, as seen in the Kelowna case, where a realtor was fined for misleading advertising by not clearly labeling AI-enhanced images.

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When using AI for virtual staging, agents should:

• Clearly label all AI-altered images as "virtually staged" to avoid misleading potential buyers.
• Ensure that staged photos do not remove or hide property flaws or structural elements that could mislead viewers.
• Provide "before" and "after" images to maintain transparency.
• Include a disclaimer in the property description stating that some images have been virtually staged to showcase the potential of the home.

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Protecting Client Data When Using AI

AI tools are also increasingly used for data analysis, such as analyzing client preferences and market behaviors. However, real estate professionals must be cautious when inputting any personal or sensitive information into AI systems. Many AI platforms store and analyze user interactions to improve their models, which can inadvertently expose client data. To protect client confidentiality:

• Always obtain informed consent before using personal or property-related data in AI tools.
• Anonymize any client information entered into AI systems.
• Review the privacy policies of AI service providers to ensure that your clients' data is handled securely.

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Accuracy and Accountability

Real estate agents are responsible for ensuring the accuracy of any information generated by AI. AI systems can sometimes produce inaccurate or incomplete results, and realtors must verify all AI-generated content before sharing it with clients or including it in advertisements. Inaccurate information can lead to misleading advertising, which violates the Real Estate Services Act (RESA). To avoid these pitfalls:

• Double-check AI-generated property descriptions, market data, or other outputs for errors.
• Clearly communicate with clients when AI tools are being used and explain any potential limitations.
• Avoid over-relying on AI in areas where professional expertise is required, such as legal or financial advice, and always refer clients to licensed professionals when necessary.

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Preventing AI Bias

AI tools can sometimes exhibit bias based on the data they are trained on. This can have significant implications, especially when screening tenants or making decisions that could affect individuals based on race, gender, or other protected characteristics. To mitigate AI bias:

• Ensure any AI-generated recommendations are fair and free from discriminatory practices.
• Implement protocols for identifying and correcting any biases in AI-generated outputs.

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Conclusion

AI is a powerful tool for real estate professionals, offering ways to enhance property listings, streamline tasks, and provide valuable insights. However, it also brings risks, particularly regarding accuracy, client confidentiality, and legal compliance. By following best practices such as disclosing AI usage, protecting client data, and verifying the accuracy of AI-generated content, realtors can harness the benefits of AI while upholding ethical standards and avoiding legal pitfalls.

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For further reference, you can explore the BCFSA AI Guideline​