We are delighted to introduce a timely, pragmatic new training suite for California licensees: Artificial Intelligence Training: Harnessing AI While Managing Risk™.

This premium training fully illustrates how to safely augment your practice with AI-powered tools while maintaining absolute regulatory compliance — without sacrificing human intuition. Over the coming weeks, the firsttuesday Journal will feature exclusive excerpts from this multi-media suite.

This fourth installment highlights the critical need to maintain strict compliance with advertising laws when using AI-generated content, and the proper handling of digitally manipulated property photos.

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Drunk on tech: keeping your advertising sober

Consider an agent who wants to freshen up their advertising materials.

They do not consider themselves particularly creative, and turn to AI software to help with their next campaign to attract clients.

The AI produces elegant copy which the agent uses, and also plugs this into a graphic ad generator, similarly powered by AI.

The entire process takes under an hour and the agent, thrilled with the results, posts the ad to their social media pages.

But in their delirium, the agent missed the most important step in advertising: remaining compliant with real estate law.

Advertisements include activities such as:

  • business cards;
  • stationary;
  • websites owned and maintained by the soliciting real estate licensee;
  • promotional and advertising flyers, brochures, postal mail, leaflets and FARM letters;
  • advertisements in electronic media (including internet, email, radio, cinema and television);
  • print advertising in any newspaper or periodical; and
  • “for sale,” “for rent,” “for lease,” “open house,” and directional signs that display the name of the licensee. [DRE Regulations §2773]

All these advertisements — whether carefully crafted by an individual or generated by AI — need to include the agent’s:

  • full name;
  • DRE license number;
  • Mortgage Licensing System (NMLS) ID number (when applicable); and
  • their responsible broker’s identity. [Calif. Business & Professions Code §10140.6]

Failure to comply with advertisement law may result in the agent and/or their employing broker receiving:

  • disciplinary action by the DRE; and/or
  • criminal prosecution.

When this mistake is made today, saying “The AI did it” is not a defense to a violation of California real estate law.

Beyond the lens: disclosing digital alterations

In real estate, we sell the dream, so to speak. But of course, we need to accurately disclose the reality too, without a cover up.

Consider a seller agent marketing a home for sale. The property is vacant, but the agent knows that presenting images of the property furnished will help potential buyers imagine how they will use the space.

But the seller is unwilling to pay for staging.

The agent considers their options, then turns to AI for help.

The agent uses an AI-powered image generator to update some of the photos with furnishings. The agent also realizes the property shows better with other lighting, so they adjust the exposure.

Right before publishing the photos on the multiple listing service, the agent stops themselves — remembering that before publishing the photos they need to disclose they, the agent, digitally manipulated the images.

An agent who digitally stages a property is legally mandated to include a reasonably conspicuous disclosure of the alteration on or adjacent to the image. The disclosure must state:

  • that the image has been altered and is not the original; and
  • embed or provide a direct path — such as a URL — to the original, unaltered photo. [Bus & PC §10140.8]

However, these rules stop at the property line: standard darkroom edits like lighting, white balance, or exposure changes do not require disclosure, as they refine the image without misrepresenting what is the real estate.

Further, the California Regional MLS (CRMLS) prohibits digitally altered images which add, remove or adjust any real estate elements which alterations will not exist prior to closing a transaction at the asking price. These include changing the:

  • flooring;
  • walls;
  • windows;
  • structural elements;
  • paint color;
  • landscaping;
  • façade;
  • fixtures;
  • floor plans; or
  • views through windows.

AI in the management of interaction with a client

Agents representing a client are constantly gathering data to build a unique profile of the client and the property involved. All the information needs organizing to best represent, advise and close transactions with the client.

Once information is gathered, client relationship management (CRM) software categorizes and prioritizes the constant long-term use of information. The value of client information is solely about follow up to maintain client confidence in the agent as consistent.

AI is used in CRM systems to take CRM software beyond simply storing data and automating its retrieval to create a powerfully capable CRM assistant. For example, AI-powered CRM software working as an agent’s assistant:

  • identifies and separates clients into lists based on any number of characteristics and situations (e.g. “opened the last email” or “didn’t open the last email”), setting up the agent to personalize the next message sent to each group;
  • automatically reminds agents and even generates emails to clients on their closing anniversaries, birthdays, and any other date the agent specifies; and
  • notifies the agent when the same individual views a listing multiple times, signaling the agent to reach out directly to the individual about buying or selling.

CRM software for the office has a cost, just as any assistant such as a transaction coordinator (TC). The new AI benefits do warrant a broker considering the greater effectiveness of agent follow up with clients to capture those other deals lost which CRM tools will capture.

Editor’s note — Stay tuned for the next excerpt of Artificial Intelligence Training: Harnessing AI While Managing Risk™.

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