Most AI-altered listings go undisclosed, California law bans it

A Coraly study found 10.8% of listing photos on major real estate portals showed digital alterations, yet more than 90% lacked disclosure. Sky replacement was most common. Researchers warned current workflows hinder compliance with California’s new AI image disclosure law and called for clearer standards and improved industry-wide practices. AI Summary

More than 1 in 10 primary listing photographs on the nation’s four largest real estate portals show evidence of digital alteration — and over 90% of those images carry no visible disclosure, according to a new study.

The analysis by real estate intelligence platform Coraly examined just under 40,000 primary listing images from Zillow , Redfin , Realtor.com and Homes.com during the first quarter.

Researchers found that 10.8% — 4,330 images — showed indicators of digital manipulation, ranging from sky replacement to virtual staging and object removal.

Sky replacement alone appeared in 69% of altered images, making it the single most common editing technique.

Findings arrive as California Assembly Bill 723 , which took effect Jan. 1, requires licensed real estate brokers and salespersons to conspicuously disclose digitally altered images and provide access to original, unaltered versions.

The law, among the first known real estate specific statutory disclosure obligations for altered listing images, applies to licensees rather than the portals that distribute listings.

Alterations focus on exteriors

Data shows that editing concentrates heavily on exterior photography, where 13.1% of images showed alteration, compared with 4.5% for interior shots — a nearly threefold gap.

Living rooms and bedrooms followed at 6.4% and 5.9%, driven overwhelmingly by virtual staging. Kitchens registered 0.7% alteration, while bathrooms showed effectively zero across all four portals.

“The split is consequential for policy: a manufactured sky carries a different risk profile than a concealed defect,” the report stated.

Among the four portals, Homes.com had the highest alteration rate at 12.4%, followed by Redfin at 11.2%, Zillow at 11.0% and Realtor.com at 8.7%.

Researchers cautioned that differences between portals may reflect listing mix, MLS feed composition, agent demographics or platform AI tool deployment rather than portal policy.

Virtual staging, object removal raise concerns

Virtual staging — the digital insertion of furniture and decor — appeared in 10% of altered images.

The study found that 88.8% of staged images were applied over existing furnished spaces.

A smaller but higher-risk category involved object removal, accounting for 1.5% of altered images. Researchers identified 66 images where items such as satellite dishes or utility meters had been digitally removed.

Coraly identified 218 images that appeared to be CGI renders or architectural imagery presented as real property photographs — characterized as “the most extreme consumer experience gap category.”

Compliance gap attributed to workflow, not will

More than 90% of altered images showed no visible disclosure language on the image itself, in captions, listing descriptions or adjacent text, according to the study.

Researchers characterized the compliance gap as “not a will problem, but a workflow problem.”

“An agent engages a photographer who delivers JPEGs with no metadata, no record of what was altered,” the report said. “The original files stay on the photographer’s hard drive — sometimes deleted after delivery. The agent often cannot comply — not because they are unwilling, but because the workflow was never built to support it.”

California’s AB 723 covers alterations to “elements outside of, or visible from, the property,” which may include sky visible above a property’s roofline.

The report recommends that regulators issue guidance on sky replacement, consider portal obligations in future regulatory guidance and explore a national working group for consistent AI image disclosure standards.

Coraly said it has developed a compliance workflow in partnership with San Diego MLS that operates at listing submission, scanning images for alteration and generating publicly accessible proof pages with stable URLs and QR codes.

This article was written by Jonathan Delozier and generated with the assistance of HousingWire Automation. It was reviewed by a HousingWire editor before publication.