If you’ve used AI staging to swap the flooring, fill an empty room or green up a dead lawn in a listing photo this year, it might need a label now. In one Wisconsin MLS, an unlabeled altered photo can cost you $10 a day.
The rules are tightening because buyers are noticing. We recently rounded up what buyers are saying about AI staging on Reddit. They described pools that didn’t exist, rooms that were somehow bigger in the photos and one home that “didn’t even look like the same house.”
Buyers are now using a term for it: “housefished.”
How Common Is It?
More common than you might think. A study released in June by Coraly, a real estate team growth platform, found that nearly 11% of roughly 40,000 primary listing photos pulled from Zillow, Redfin, Realtor.com and Homes.com in the first three months of 2026 showed evidence of being digitally altered.
The Rules Are Catching Up
A few states and MLSs have already drawn a line, and more are looking at it.
California: Since Jan. 1, 2026, California has required disclosure of certain digitally altered images in real estate advertising. Covered ads must identify the image as altered and give consumers access to the original. The law applies when edits add, remove or change elements such as furniture or flooring. Routine fixes like lighting, sharpening, cropping and exposure are generally excluded, as long as they don’t materially change how the property is represented.
Metro MLS (Wisconsin): As of Sept. 1, digitally altered primary photos can draw a $10-per-day sanction until they’re replaced. Altered photos without the required watermark can trigger a separate $10 sanction. Agents also have to upload the original image immediately before the altered version and disclose the changes in the public remarks.
Wisconsin, statewide: Starting Jan. 1, 2027, 2025 Wisconsin Act 69 requires licensees to disclose advertising altered with technology, including AI, when the changes create a false or misleading impression of the property.
New York: The state’s Department of State issued a consumer alert late last year citing “a significant rise in artificially generated pictures on real estate listings.” In New York City, Mayor Zohran Mamdani proposed in July that landlords, brokers and listing platforms disclose when rental photos or videos are made or altered with AI. “You shouldn’t have to worry whether or not the apartment you’re viewing online is real,” he said.
New Jersey: Lawmakers are considering legislation restricting AI-generated listing images.
Even where there’s no law yet, the NAR Code of Ethics already requires Realtors to present a “true picture” in their advertising.
Where the Industry Stands
The big players aren’t arguing against disclosure. A Zillow spokesperson told Fortune, “We support clear disclosure when AI is used to materially alter a listing image.” Zillow’s own standards, according to a July blog post, “require that listing photos accurately represent the home.”
The National Association of Realtors’ (NAR) take, from an August article: let AI “show possibilities,” not “rewrite reality.”
Buyer agents are pushing the same message. Rich Rosa, past president of the National Association of Exclusive Buyer Agents, said in a March statement, “The concern is the gap that can occur when images imply features, scale, or conditions that aren’t there in person, especially when digital changes are not clearly disclosed.”
What’s Fine and What’s Not
Rules vary by state and MLS, so check yours. But based on where the rules are heading, here’s a general guide.
Usually fine:
- Adjusting lighting, exposure and white balance
- Cropping and sharpening
- Virtual staging that’s clearly labeled, with the original photo next to it
Likely needs disclosure, or shouldn’t be done at all:
- Changing flooring, paint, cabinets or countertops
- Adding features that don’t exist, like a pool, garden or fence
- Making rooms, windows or yards look bigger than they are
- Removing permanent features or anything a buyer would want to know about
- Using AI to hide condition, like cleaning up a dirty or damaged room
Before You Hit “Publish” on That Listing
- Keep every original. You may be required to show it, and you’ll want it if anyone questions an edit.
- Put the original next to the edit. Buyers asked for it, and some rules already require it.
- Label anything altered. On the photo itself if you can, and in the remarks.
- Ask your photographer what they changed. And know whether anyone edited them again after delivery.
- Read your MLS rules. At least one MLS already has daily fines on the books.
Or as a Zillow spokesperson told Fortune,
“AI should help set accurate expectations before a tour, not create surprises when a buyer walks through the door.”
