The Dos and Don’ts of Using AI in Real Estate

Disclaimer: PropStream does not offer legal advice. This article is for informational purposes only. Consult a legal professional before using AI in real estate.

It’s no secret that artificial intelligence (AI) can make you more efficient as a real estate agent. However, how you use AI is vital. Used improperly, AI can expose you to significant legal risks, pose ethical concerns, and erode clients’ trust in you.

Read on to learn the most common mistakes agents make when using AI and how you can avoid them to ensure compliance, maintain accuracy, and preserve your “human edge.”

Data Security and Client Confidentiality

The first mistake many eager AI-users make is entering sensitive data into an AI search engine.

For example, asking a large language model (LLM) like ChatGPT or Claude to segment your leads and customers could be a smart move. However, if you’re not careful, you could feed it sensitive information, such as personal loan data or phone numbers.

This could constitute a breach of client trust and violate data privacy laws. After all, many types of personal and financial data are subject to federal, state, and local regulations. Do your research and consult a legal professional to stay on the safe side.

Compliance and Legal Exposure

Other legal pitfalls come from relying too heavily on AI to generate marketing or legal text.

Fair Housing Violations

Imagine you use AI to write property listing descriptions. While this can save time, it could also introduce problematic language. For instance, phrases like “great for young families” may be considered exclusionary of other demographics and thus violate fair housing laws.

Important: Under the Fair Housing Act, you aren’t permitted to discriminate in housing based on race, color, national origin, religion, sex, familial status, or disability.

The Legal Contract Trap

Similarly, you may be tempted to have AI draft or review legal contracts to save on legal fees. However, AI can make mistakes, such as including clauses that aren’t legally binding. This could void agreements and expose you to significant liability.

Consequently, what saved you some money in legal fees could end up costing you much more—financially and reputationally.

Accuracy and Ethical Misrepresentation

That said, misusing AI isn’t just legally harmful but ethically harmful. Here are some examples:

Inaccurate Property Descriptions

Left unchecked, AI-generated property descriptions could be misleading. For instance, they might claim that a home has five bedrooms when it actually has four, or that the bathroom was recently renovated when it wasn’t. By not double-checking these details, you could inadvertently mislead buyers and lose their trust (not to mention face legal challenges).

Virtual Staging Gone Too Far

Virtual staging is a powerful way to show people what a home could look like furnished. Essentially, it’s using AI to superimpose “virtual furniture” onto photos of real, physical spaces.

However, anytime you trust AI to virtually stage your home, there’s a risk it may add more than furniture and fundamentally change the property’s structure or overall appearance. This could result in a misrepresentation of the property. Attracting potential buyers with such photos could be problematic, as they don’t reflect the home’s reality.

Losing the Human Edge

On top of avoiding illegal and unethical uses of AI, be careful not to let the technology replace the uniquely human elements of your work.

While AI may excel at administrative tasks and drafting text, it likely doesn’t have the nuanced negotiation skills, localized market intuition, or empathy for your clients that you have. Consequently, it’s important to leverage AI where it can give you an edge, but avoid using it where it could jeopardize your role as a trusted advisor.

The best real estate agents use AI as a tool, not a replacement.

Real Estate AI by PropStream

Now that you know how to practice safe and ethical AI usage, let’s explore PropStream’s AI tools.

With the PropStream Intelligence™ platform, users can analyze aggregated datasets powered by predictive AI, such as Property Condition, Wholesale Value, and Foreclosure Factor, to predict market trends before they occur. Plus, PropStream Intelligence now offers a built-in chat feature known as the PropStream Intelligence (PSI) Assistant.

The PSI Assistant is available on the Property Details pages of properties within the software, allowing users to easily navigate complex information, generate data-driven insights regarding property potential, and backfill the Rental ROI Calculator and the Fix & Flip Analyzer to generate in-depth reports to share with investor clients!

Try PropStream for Free

Ready to harness the power of real estate AI using the ultimate end-to-end outbound real estate platform? PropStream It!

PropStream is an agent’s all-in-one tool for finding leads, building lists, reaching out, and even helping clients obtain funding with our LoanGeek integration.

Search → Identify → Connect → Transact— from one convenient platform!

*PropStream engages an independent third party to perform skip-tracing.