Virtual Staging Collides With Real Estate's Ethical Rules
Virtual staging - adding furniture and décor to property photos through AI - is spreading across real estate listings even as disputes mount over where marketing ends and misrepresentation begins.
The National Association of Realtors reports that 83% of buyers' agents said staging made it easier for buyers to visualize a property. Yet the same tool that helps buyers imagine a home's potential can obscure what they're actually buying.
Edward Zorn, vice president and general counsel at California Regional Multiple Listing Service, points to a foundational rule that applies regardless of the technology used. Article 12 of the NAR code of ethics requires agents to "present a true picture in the advertising, marketing and representation of the listing."
"The standard is that you shall present a true picture," Zorn said. "We call it the true picture standard."
When Photos Become Liability
Agents have manipulated property photos for decades using telephoto lenses and Photoshop. Virtual staging simply made the practice faster and more convincing - which created new problems.
One seller digitally enhanced a fireplace in a photo. The buyer later discovered a $25,000 to $30,000 chimney and flue problem that made using the fireplace impossible. The buyer used the altered photo as evidence in a misrepresentation claim.
Another case involved exterior lights that didn't exist. A buyer closed on the home, tried to find the switches, and discovered the lights were purely digital. Installing real lights would have cost $5,000 to $6,000.
"These are cases that get settled and you don't hear anything about after," Zorn said.
Agents Divided on the Practice
Not all agents use virtual staging, even as adoption accelerates. Veronique Perrin, a real estate agent at Coldwell Banker Warburg in New York, refuses it entirely.
"I never use virtual staging for my listings," she said. "I find that buyers actually resent it and respond very negatively when they feel they were deceived about what is offered."
Perrin has seen the damage from both sides of transactions. When representing buyers, she often arrives at listings that don't match their photos. "The misrepresentation is getting out of control. Disclosure about photos being virtually staged is often missing, and some of it is so well done now that you only find out when you walk in."
She now calls listing agents before showing properties to confirm photos match reality.
The MLS Is Not a Marketing Platform
Zorn draws a distinction that matters: multiple listing services are broker cooperatives, not marketing platforms.
"We do excellent marketing and excellent distribution," he said. "But we can't lose sight of the fact that we are a broker cooperative. Putting up what a listing could be if you spent another $50,000 - that's great for marketing. That's terrible for me as a buyer's agent."
A Long Beach condominium listing illustrated the problem. The photo showed a "stunning view" of the Queen Mary occupying about half the frame. When buyers arrived, the Queen Mary was a tiny fraction of that size.
Buyers grew frustrated with their own agents. "Why did we drive all the way out here?" they asked. "I told you to find me something with a great view."
Enforcement Over New Rules
California recently passed Assembly Bill 723, requiring agents and brokers to disclose when listing photos are modified by AI or digital editing. The law mandates that altered images include a disclaimer and that original photos be made available.
Zorn doesn't believe new laws are necessary. "We don't need new regulation or laws. We just need to enforce the rules that we have," he said. The NAR code of ethics standard works well if enforced consistently.
Perrin is less confident about enforcement. "Honestly, I am not sure how you can actually keep up with the bad behavior, especially with the world of AI," she said.
For real estate professionals navigating these rules, understanding the ethical and legal boundaries is essential. AI for Real Estate Brokers covers how to use technology responsibly in property marketing and sales.
Without consistent enforcement, the gap between listing photos and the property itself will likely widen. A feature that looks like a marketing advantage from one side of a transaction becomes a genuine problem for the other.
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