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The Real Reasons AI Can’t Replace Real Estate Professionals

Experimenting with artificial intelligence, like ChatGPT? Beware, there are legal and ethical pitfalls. We cover them here.

As a tech-savvy professional, you use ChatGPT to prepare a description of your new listing: four-bedroom, three-bath pool home with an expansive yard. A few moments later, this generative artificial intelligence (AI) tool delivers an attractive write-up, but mistakenly adds a grove of fruit trees to the description.

You quickly post the description to the multiple listing service (MLS), where it immediately attracts the attention of an overseas buyer, who submits an offer for this “perfect” home.

All goes well until after the closing, when the buyer finds no fruit trees in the backyard. Now, you face potentially costly ethical and legal problems from posting a misleading description of the property—a situation that could have been avoided by double checking that AI-generated description.

“ChatGPT is an excellent tool and may jump-start creativity, but
your expertise will be needed to verify accuracy,” says Dave Conroy, director of emerging technology, National Association of Realtors® (NAR). “You need to know that the results of ChatGPT-created text are generally 80% to 90% accurate, but the danger is that the output sounds confident, even on the inaccurate parts.”

OpenAI’s ChatGPT is one of several generative AI tools that can help you create text, images, videos, business plans, marketing strategies and more. You enter a prompt about what you want, and the AI tool will review the vast internet database and deliver its output. But that’s just the start of the process, because you can refine your prompts to achieve more accurate and effective results.

“Treat ChatGPT as an assistant, and always review the output,” says Jimmy Burgess, CEO, Berkshire Hathaway HomeServices Beach Properties of Florida in WaterColor.  “You need to review the assistant’s work and have a conversation about changing the text to reflect your personality or your market,” he adds.

Posting an inaccurate property description is only one of the potential mistakes to avoid when using ChatGPT or other generative AI tools. There are also legal risks like copyright infringement and fair housing violations, as well as communication and marketing errors that can negatively impact your real estate business.

“Agents may rely too heavily on AI for communication, which can lead to responses that feel impersonal or generic,” says Katie Lance, CEO, Katie Lance Consulting in Pleasanton, California.  “This might turn off clients who seek a personalized touch in their interactions.”

Avoid misrepresentation

You must understand the legal landscape, says Chloe Hecht, senior counsel for Legal Affairs at NAR. “Keep in mind that AI is a tool, so any laws or regulations that apply to you continue to apply when you are using AI,” she says, adding that legal risks surrounding AI will likely evolve as federal and state laws adapt to the growing use of AI.

One of the biggest potential problems is misrepresentation. When using AI to write listing content, you must ensure the information is correct, says Hecht, noting that the Realtor® Code of Ethics prohibits exaggeration, concealing pertinent facts and misrepresentation in communications to clients.

Conroy adds that generative AI images must be used ethically and with transparency. If you use ChatGPT to show how a vacant listing could look with furniture, for instance, you should ensure that potential buyers understand that these are AI-generated photos—not the actual rooms themselves.

Copyright infringement

Copyright infringement is another legal concern, says Richard Swank, associate general counsel at Florida Realtors® in Orlando. He notes that federal courts have ruled that only humans—not AI programs—can hold the rights to text, images, videos and inventions. That can pose problems if you apply ChatGPT to content owned by someone else.

“Let’s say you plan to apply AI to floor plans for advertising purposes,” he says. “The architect, designer or builder likely has the rights to those plans and may not want you to manipulate them.” In fact, some mapmakers have been known to add fake towns to their maps in random places, so if someone tries to copy the map, they can take the offender to court for copyright infringement. “Also, ChatGPT will use that map with erroneous information when responding to your prompt,” Swank says.

Fair housing laws

When using AI to draft property descriptions, it’s critical for real estate professionals to ensure that any AI output doesn’t violate federal, state or local fair housing laws, says Liz Sturrock, chief of MLS and innovation at Miami Realtors®. For example, an AI-generated property description might say: “This home is within easy walking distance to local shops,” ignoring the possibility of a buyer in a wheelchair.  “Always keep fair housing issues and your obligations under NAR’s Code of Ethics in mind when using AI in connection with your real estate business,” Sturrock adds.   

Images and videos could pose fair housing problems. Consistently using AI-generated photos of smiling buyers or sellers of similar age, race, ethnicity or gender could be perceived as discriminatory advertising. “In any case, you should be sure that your images and videos match the demographics in your local market and won’t turn off prospective clients,” says Swank.

Brokers who use AI tools for recruiting agents should also be careful in their communications to avoid potential discrimination claims, Swank adds.

Drafting documents

Avoid using AI to draft contracts, modify standard forms or provide legal advice to clients, Hecht says. “Many state laws, as well as Article 13 of the Code, prohibit the unauthorized practice of law,” she says. “AI is not a licensed professional, and the platforms make no reliable warranties or representations.”

Lance also warns that ChatGPT’s output does not replace legal advice. Taking its responses as legal guidance could lead to compliance issues or legal pitfalls, she says. For instance, don’t use ChatGPT to answer a client’s questions about property boundaries and easement rights because the AI response may not be tailored to local laws, and this could result in a legal dispute with the buyer.

Similar mistakes could occur when preparing a competitive market analysis for a seller. “AI models might not have the most current local market data,” Lance adds. “So, don’t use outdated or generalized information for decision-making or client advice.”

Again, real estate professionals should be fact-checking any information that they disseminate when it is harvested solely from ChatGPT, says Sturrock. “Even asking ChatGPT to cite sources will not protect you, as it has quite famously manufactured sources of the generated content.”

Missing your personal touch

While ChatGPT can save time and automate routine tasks, you need to give AI-generated content your personal touch, Lance says. “After a while, the property descriptions generated by ChatGPT may feel generic and fail to stand out in a crowded market,” she says.  Also, if you focus on first-time buyers, your communications will require a different tone than if you serve the luxury waterfront market.

When using ChatGPT to prepare a business or marketing plan, you need to be sure it is aligned with your personality and current practices, according to Swank. An AI-generated plan can also look unrealistically rosy, he adds.

If you’re not yet using ChatGPT, don’t be afraid to experiment, says Burgess. “The biggest mistake I see is not playing with the tools enough,” he says. “If you invest time learning about AI now, it will pay dividends for years to come.”

Burgess says ChatGPT won’t replace real estate professionals, because it doesn’t consider the human qualities that go into building relationships with buyers, sellers and investors. “But those who embrace it will be able to outperform those who don’t. Remember that you can’t change the flow of the ocean currents, but you can learn to surf.” #

Richard Westlund is a Miami-based freelance writer.

Note: OpenAI has a section of its website devoted to using AI safely. Go to