As technology advances and becomes a better tool for society, the 2004 movie I, Robot always comes to mind. Although our current technology is not at the same level as the self-aware robots in I, Robot, artificial intelligence (AI) has gained traction in many industries, including real estate. The following scenarios contemplate how technology, including AI, can be used to enhance your real estate practice while also being mindful of potential concerns when using new technologies.

Surveillance systems and technology 

The licensee has a listing that has a security system. The cameras record at all times. Does the licensee and/or the seller need to disclose the presence of the cameras?

Sellers have a right to protect their property and should not have to disclose the presence of surveillance equipment on the property for safety reasons.

Wis. Stat. § 995.60 covers the use of surveillance equipment in connection with the sale of real estate, providing that:

• It is not an invasion of privacy when the owner of real estate has surveillance, whether audio or video, in an open house, individual showing or other viewing in connection to the sale of real estate.
• “Property” and “owner” are broadly defined to include all types of properties, and the law is not limited to residential.
• The owner of the real estate may not copy, sell, rent, broadcast, post, publish, distribute, disclose, transfer or otherwise share a representation of an individual recorded with a surveillance device unless it is pursuant to a court order or the request of law enforcement investigating possible criminal conduct.
• Use of surveillance equipment in bathrooms is prohibited.
• An individual who copies, sells, rents, broadcasts, posts, publishes, distributes, discloses, transfers or otherwise shares a representation may be required to forfeit not more than $500.

The law does not require a seller to post or disclose that the seller has surveillance equipment on the property. Additionally, the law does not require the real estate licensee to ask the seller about surveillance equipment in the property. Further, the law does not require any disclosure by the real estate licensee as to any surveillance equipment in the property. 

Licensees working with buyers should encourage buyers to refrain from making certain comments about the property until outside of the property. 

See “Action! Are You Ready for Your Close-up?” in the June 2020 Wisconsin Real Estate Magazine at www.wra.org/WREM/Jun20/Surveillance. 

Virtual staging

A licensee listing a home wants to post photographs of the property that include virtual staging. Another licensee pointed out that the virtual staging could be seen as false, deceptive or misleading. Is virtual staging misleading to buyers? How should licensees approach using virtual staging for their listings?

There are no state statutes or administrative code provisions that address virtual staging specifically, but an agent’s advertising cannot be false, deceptive or misleading, per Wis. Stat. § 452.136(1). Virtual staging that is not readily apparent from the advertisement or disclosed in the advertisement could be considered false, deceptive or misleading.

If virtual staging photos are in the MLS and the buyer arrives for a showing to find the owner’s cluttered home, that buyer may feel deceived. The main concern with virtual staging is the fact that if the manipulated images are shown to potential buyers, they’ll be sorely disappointed if and when they visit the home. While the enhanced images may entice buyers to visit, they’ll find a home they will not recognize from the images they saw, and they may just walk away. Such a scenario certainly doesn’t benefit the seller, nor does it help the real estate agent working to sell the home. Therefore, the safest approach is to label photos with virtual staging as such so there is no confusion.

The false, deceptive and misleading rule has been part of real estate license law for decades. If the broker feels labeling is not needed, then the broker takes the risk. If there is a complaint, then the broker can make their arguments, and the REEB will make the determination based on the facts and circumstances. If nobody complains, then the specific issue in the particular circumstances will not be analyzed. It is a case-by-case determination.

What are licensees allowed to do virtually as far as staging? Can they change the furniture or color of walls as long as they have a disclaimer?

Some agents may deem this an innocent “update” of paint color or removal of wall coverings. However, there appears to be a concern that members of the public might feel misled or deceived when going to see the property where the property photos were altered and without any disclosure about the alterations being made to the photos. At this time, there has not been any guidance from the Real Estate Examining Board as to whether modifying the photos in this manner when advertising the property is deceptive without disclosing the changes. Therefore, the use of disclaimers is strongly recommended to assure the consumer is aware. Prudent practice would suggest using the disclaimers before and after the images to minimize claims of misrepresentation or false advertising.  

Article 12 of the REALTOR^® Code of Ethics provides:

REALTORS^® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations. REALTORS^® shall ensure that their status as real estate professionals is readily apparent in their advertising, marketing, and other representations, and that the recipients of all real estate communications are, or have been, notified that those communications are from a real estate professional. (Amended 1/08)

Further, Wis. Stat. § 452.136(1) provides, “False advertising. Licensees shall not advertise in a manner which is false, deceptive, or misleading.”

Artificial intelligence and real estate

With AI technology gaining popularity in society, firms are wondering how AI can be used as a tool in the real estate industry. What are some considerations for licensees who wish to use AI in their business practices?

Currently, there are multiple cases revolving around the use of AI and any copyright claims to AI-generated materials. Although these cases are still being decided, Articles 2 and 12 of the REALTOR^® Code of Ethics provide parameters for licensees who wish to use AI.

Article 2 states, “REALTORS^® shall avoid exaggeration, misrepresentation or concealment of pertinent facts relating to the property or the transaction.”

Article 12 says, “REALTORS^® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing and other representations.”

Chloe Hecht, senior counsel at the National Association of REALTORS^®, offers the following guidance for using AI as safely as possible:

• Always review AI-generated content for accuracy.
• Don’t use AI to create work you want to be able to protect.
• Don’t assume any third-party content was created by AI and is therefore available for your use. Always get permission in writing for the way you want to use the work, and save that documentation.

For more information about utilizing AI in the real estate industry, see the REALTOR^® Magazine articles, “AI Use in Real Estate Comes With Copyright Concerns,” at www.nar.realtor/magazine/real-estate-news/law-and-ethics/ai-use-in-real-estate-comes-with-copyright-concerns, and “Start Experimenting With AI Now,” at www.nar.realtor/magazine/real-estate-news/technology/start-experimenting-with-ai-now.

Can a licensee use AI to “fix” a broken window in a photo of a listed property? What about using AI to remove family portraits that the seller did not want included in any advertising?

Arguably, using AI to portray that a window is in perfect condition when it is really broken is a violation of Article 2 and Article 12 of the REALTOR^® Code of Ethics. In contrast, simply removing the seller’s personal family portraits with AI is not a misrepresentation or concealment of pertinent facts.

Additionally, it would be prudent to disclose that the photos were altered to prevent allegations of false advertising or misrepresentation.

See the REALTOR^® Magazine article, “Using AI to Enhance Listing Photos Can Be Legally Risky,” at www.nar.realtor/magazine/real-estate-news/law-and-ethics/using-ai-to-enhance-listing-photos-can-be-legally-risky.

Can a licensee use AI to write marketing materials such as a flier sent to all prospective clients in an area?

A licensee could potentially use AI to create images or write language for marketing materials. The licensee should always be mindful that AI-generated materials may not be accurate, so the licensee should always proofread any content created by AI. Additionally, the licensee should ensure that the content complies with fair housing laws. 

Another aspect to consider when using AI to create content is copyright. If AI is used to create images for any materials, the licensee should check if the AI-generated image utilized other copyrighted work. If so, the licensee should verify that they have the appropriate license before using the AI-generated image.

Likewise, any AI-generated text may come from copyrighted text. Licensees can double check for plagiarism using a plagiarism detector service.