State warns of AI real estate scams
The New York Department of State has issued a warning for potential homebuyers to be on the lookout for artificial intelligence-generated pictures (AI) on real estate listings. The new trend has been used by sellers to improve the look of a property online, raising serious concerns about the accuracy, authenticity, and potential for false advertising. “While AI can help homebuyers imagine what a potential home can look like, these automated technology tools may produce misleading or exaggerated representations of properties,” said Secretary of State Walter Mosley. “I urge real estate agents to be mindful when listing and consumers to be vigilant when searching for their dream home.”
The Department of State’s Division of Licensing has rules to protect the public from licensed professionals engaged in deceptive advertising. Dishonest and misleading advertisements are prohibited and could subject the broker or salesperson to disciplinary action. In addition to the legal risks, real estate agents using generated images may negatively impact their bottom line by using AI to enhance their listings, as suggested in a study by the International Journal of Information Management. It found that potential customers perceive AI images as less authentic, less professional, and misleading, which can negatively affect consumer trust and purchase intentions.
For prospective homebuyers, the Division of Consumer Protection offers these tips to protect themselves from being misled by deceptive advertising practices:
Research and look for credible resources and referrals. During the homebuying process, buyers may work with lenders, real estate agents, home inspectors and other individuals. It’s important to do some initial research to get started on the right path.
Take your time assessing all the people you will work with and depend on to guide you through this important milestone.
Ask friends and family for recommendations of professionals they know and trust.
Check with your local Better Business Bureau to see if any complaints have been reported.
Verify the identity of any Real Estate professional. Confirm that the real estate professional you’re working with is licensed in New York by following these steps:
Visit the New York State Department of State Public License Search Database
Conduct an independent online search and check the phone number associated with their real estate license address. Call the number to verify.
Request to see a copy of their Department of State-issued photo real estate license.
Look for signs of AI-generated or manipulated photos or videos. AI-generated images often exhibit subtle anomalies. Look for subtle defects or unrealistic images and videos.
Check if there are any distorted or inconsistent details. For example, watermarks, blurry backgrounds, or inconsistent window views.
Beware of images that look too perfect, misrepresenting the condition of the property. Real homes always have small imperfections.
Never send money, provide an initial “holding deposit,” or share personal information until you have met the agent and seen the property in person. Giving money directly to a seller or agent before verifying is risky, and the money paid may be difficult or impossible to recover.