Artificial intelligence in real estate

We are now firmly in a period of technological change, where artificial intelligence (AI) is quickly becoming part of the everyday toolkit for real estate professionals. Used well, AI has the potential to enhance service delivery, improve efficiency and free agents to focus on client relations.

While AI-powered tools can be used to support routine administrative and marketing functions, AI should be seen as a drafting and support tool only, not a substitute for professional judgment or due diligence.

The use of AI in advertising

Real estate agents will inevitably make representations to attract potential clients (sellers or lessors), buyers and/or tenants. These representations may be in writing (and can include pictures, photographs, plans and drawings), a verbal statement or even conduct (including gestures and demeanor).

Section 212 of the Property Occupations Act 2014 (Qld) (PO Act) relates to false representations about property. Section 212(1) of the POA Act states that a licensee or real estate salesperson must not represent to someone else anything that is false and misleading relating to the letting, exchange or sale of real property.

Section 212(3) of the PO Act provides that a representation is taken, for the subsection, to be false or misleading if it would reasonably tend to lead to a belief in the existence of a state of affairs that does not in fact exist, whether or not the representation indicates that the state of affairs does exist.

If a person makes a representation relating to a matter and he or she does not have reasonable grounds for making the representation, the representation is taken to be misleading (section 212(4) of the PO Act). The onus of establishing whether the person had reasonable grounds is on the person making the representation (section 212(5) of the PO Act).

Further, section 18 of the Australian Consumer Law (ACL) prohibits conduct, in trade or commerce, which is misleading or deceptive, or is likely to mislead or deceive. Misleading and deceptive conduct is a broad concept which includes words, actions and pictures. It is irrelevant whether there is an intention to mislead; what is relevant is the overall impression created by the conduct and its actual or likely effect on the target audience.

Even if an agent has no knowledge that content published is incorrect, and the content comes from AI or a third party, an agent can still be liable for misrepresentation. Ultimately, an agent remains fully responsible for verifying all content before publishing, ensuring that all representations about property are accurate and based on reasonable grounds.

While AI can be a powerful tool for real estate agents it carries significant risks if content is not carefully verified. One of the most notably dangers associated with generative AI is its tendency to convincingly fill informational gaps by generating plausible-sounding details that may be inaccurate or fictious.

This risk was highlighted in a widely reported incident where an AI-generated rental listing referred to nearby schools that did not exist.^[1] While the listing was quickly corrected, the error which was attributed to a failure to verify AI-generated content before publication, resulted in immediate reputational damage.

Similar risks may arise in using AI to alter images of a property.

A false or misleading representation could be anything that might result in a prospective buyer or tenant being led to believe in the existence of a state of affairs that does not in fact exist regarding a property.  This includes the practice of digitally altering or enhancing photographs. Any alterations or enhancements that materially change the image, or the perception the image gives, could be considered misleading.

For example, cleaning a property and bringing in further lighting before photographing is not misleading.  However, AI image alteration that artificially lighten the colour of the paint on the walls may be considered misleading. Similarly, it may be considered misleading to alter rooms or outdoor areas to look bigger than they actually are.

It may also be considered misleading to alter an image to remove unwanted or unattractive aspects out of the background of photos. This can include everyday objects such as powerlines and trees, or foliage that blocks views, or objects located in neighbouring properties, for example, water towers and fences.

Agents should therefore be mindful to always ensure that any photographs of a property reflect the property in its current condition.

The use of AI in providing legal advice

While there are already generative AI platforms marketing AI-tools to assist real estate agents with answers to legal questions,^[2] there is a real risk that they oversimplify or misrepresent complex legal requirements. While generative AI responses may appear sophisticated, incorrect or incomplete legal information can expose agents to disciplinary action or civil liability.

Further, it is important that real estate agents, irrespective of their level of experience, do not go beyond the scope of their role as agents. In this regard, section 24 of Legal Profession Act 2007 (Qld) (LP Act) provides that a person must not engage in legal practice unless he or she is an Australian legal practitioner.

If an agent receives a legal question, they should advise their client (seller or lessor), buyer and/or tenant of the relevant provisions of the LP Act, make clear that they are not qualified to assist with providing legal advice, and recommend that they seek their own independent legal advice.

Conclusion

While generative AI can certainly be a useful tool in the real estate sector, the benefits come with important responsibilities and risks. Agents remain fully accountable for the accuracy of all representations, regardless of whether the content is AI-generated.

As well as being careful to ensure that all written and oral representations and statements made in relation to properties are completely accurate, agents should ensure that they actively encourage all prospective buyers and tenants to undertake their own enquiries and investigations to satisfy themselves that the property meets their requirements and that they obtain their own expert advice.

Read another article about agency practice: A cautionary tale for businesses seeking to engage offshore workers.

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