Artificial Intelligence Deceptive Practices Creeping into Real Estate Sector
In the ever-evolving world of real estate, technology continues to play a significant role, with startups like REimagineHome leading the charge in offering virtual staging services. These innovative platforms use AI to add virtual furniture and transform rooms into different styles, offering potential buyers a glimpse into the property's potential.
However, the use of AI in editing photos raises questions about enforcement and transparency. Making it clear that AI has been used (and how) to edit the photos seems like a good starting point, ensuring buyers are fully informed.
The German real estate market is not left behind in this digital revolution. Companies like Doozer Real Estate Systems GmbH, founded in 2014, offer platforms for renovation and modernization orders. They have pilot projects running in North Rhine-Westphalia with clients such as LEG Immobilien SE and Degewo AG. Another key player is Predium, established in 2021 by Jens Thumm, Mohamed Ali Razouane, and Maximilian Körner, providing ESG management and renovation prioritization solutions for real estate portfolio holders, including banks and housing companies.
The AI technology can effortlessly erase problems that might deter buyers, such as fixing cracked brickwork and other blemishes. However, there have been reports of instances where houses visited by potential buyers looked nothing like the AI-edited images, with some houses showing mangled numbers or things just levitating in open air.
The value that generative AI can bring to the real estate industry is substantial. According to a report by consultancy firm McKinsey & Company in November 2023, AI could generate $110 billion to $180 billion or more in value for the industry.
Yet, in many places, there's no explicit law requiring real estate agents to disclose AI alterations. Given that buying a home is one of the biggest financial commitments most people ever make, misleading photos can warp perception, shift bidding behavior, and waste time and effort for everyone involved.
Real estate agents' primary duty is to close the deal, but deception and misrepresentation can be legally damning. Hiding the disclosure of AI-edited images and altering a house's underlying structure is clearly misrepresentation. However, the use of AI often falls in a gray area, making it crucial for transparency and honesty to guide the industry's adoption of this technology.
