Housefished: How Common AI-Edited Listing Photos Really Are, the New Disclosure Laws, and How to Tell What's Real in 2026

What the Numbers Show: Mostly Skies, Rarely Kitchens

The best available measurement comes from Coraly, a real estate technology company, in a report titled “The Altered Listing: US Edition,” drawn from what it calls the Global Property Portal Index’s AI Alteration Index. Researchers examined just under 40,000 primary listing images — cover photos and main gallery images — from the four largest U.S. portals during the first three months of 2026. The headline findings, as reported by HousingWire and Real Estate News:

• 10.8% of images (4,330) showed indicators of digital manipulation.
• More than 90% of the altered images had no visible disclosure language on the image, in captions, in listing descriptions or in adjacent text, a figure Real Estate News reports was consistent across all four portals.
• Sky replacement appeared in 69% of altered images, making it the most common technique by a wide margin. “The most frequently manufactured asset in U.S. residential marketing is not the building. It is good weather,” the report said.
• Exteriors were edited far more than interiors: 13.1% of exterior images showed alteration versus 4.5% of interior shots, a gap of nearly three to one.
• Living rooms (6.4%) and bedrooms (5.9%) led the interiors, driven overwhelmingly by virtual staging. Kitchens registered 0.7%, and bathrooms showed effectively zero alteration on all four portals.

By portal, 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%. The researchers were explicit that those differences “should not be interpreted as conclusions about portal conduct” and may reflect listing mix, MLS feed composition, agent demographics or which AI tools each platform offers.

Two findings deserve more attention. First, virtual staging appeared in 10% of altered images, and 88.8% of the staged images were applied over spaces that were already furnished. In other words, most virtual staging in this sample wasn’t filling an empty room so buyers could picture scale. It was replacing furniture that was already there with different, imaginary furniture, which tells a buyer less about the room, not more.

Second, the riskiest categories were small but not trivial. Object removal accounted for 1.5% of altered images, and researchers identified 66 photos where items such as satellite dishes or utility meters had been digitally erased. They also found 218 images that appeared to be computer-generated renders or architectural imagery presented as photographs of real property — what the report called “the most extreme consumer experience gap category.”

“The split is consequential for policy: a manufactured sky carries a different risk profile than a concealed defect,” the report stated. That distinction runs through every rule discussed below, and the rules don’t all draw it in the same place.

One caveat on the data: this is a single study by a company that sells a disclosure-compliance product, built in partnership with San Diego MLS. Its methodology is described only in summary in press coverage, and automated detection of edits can miss some changes and flag others wrongly. The figures are the best measurement published so far, not a census, and they cover only primary photos, not full galleries.

California’s Law: Disclose It, and Show the Original

California’s Assembly Bill 723, by Assemblymember Pellerin, was approved by the governor on October 10, 2025 and took effect January 1, 2026 as Business and Professions Code section 10140.8. It passed the Senate 29–10 and the Assembly’s final concurrence vote 64–2. The California Association of Realtors opposed it unless amended, arguing among other things that licensees shouldn’t be liable for images on third-party sites they don’t control and that liability should attach only to material changes.

The enacted text has three working parts.

1. A disclosure, on or next to the image. A real estate broker or salesperson, “or person acting on their behalf,” who includes a digitally altered image in an advertisement or other promotional material for the sale of real property must include a statement disclosing that the image has been altered. The statement must be “reasonably conspicuous and located on or adjacent to the image.”

2. A path to the original. The disclosure must come with “a link to a publicly accessible internet website, URL, or QR code that includes, and clearly identifies, the original, unaltered image,” and the statement must tell readers the unaltered images can be found there. If the ad is posted on a website the agent controls, the unaltered versions go in the posting itself, or behind a link that meets the same standard.

3. A broad definition with a clear carve-out. A “digitally altered image” is one altered with photo editing software or artificial intelligence to “add, remove, or change elements in the image, including, but not limited to, fixtures, furniture, appliances, flooring, walls, paint color, hardscape, landscape, facade, floor plans, and elements outside of, or visible from, the property, including, but not limited to, streetlights, utility poles, views through windows, and neighboring properties.” Excluded are images where only “lighting, sharpening, white balance, color correction, angle, straightening, cropping, exposure, or other common photo editing adjustments are made that do not change the representation of the real property.”

That definition got considerably broader during the legislative process. The July 2025 version the Senate Judiciary Committee analyzed covered only “elements of the real property in the image, including, but not limited to, furniture, appliances, flooring, and walls.” The final law reaches beyond the lot line to views, streetlights, utility poles and the neighbors — exactly the kinds of edits that change what living there is like.

A few practical consequences follow from the text. The duty falls on licensees and people acting on their behalf, not on Zillow or Redfin. It covers ads and promotional material for sales; California rentals are not in this section. And the bill’s own fiscal language states that it “creates a new crime or infraction,” on top of the Department of Real Estate’s existing power to discipline licensees for misrepresentation.

The open question is the sky. HousingWire’s report noted that the statute’s coverage of “elements outside of, or visible from, the property” may include sky visible above a roofline, and Coraly’s report asked regulators for guidance specifically on sky replacement. Given that sky swaps are 69% of all detected edits, how that question is answered will decide whether the law touches a sliver of listings or a large share of them.

Beyond California: Wisconsin, New York and the Rest

Wisconsin has passed 2025 Wisconsin Act 69, which takes effect at the beginning of 2027. As described by Real Estate News, it requires licensees to disclose when technology materially alters how a property is displayed in marketing images. It also requires listings to be publicly marketed within one business day of the start of a listing agreement. Metro MLS, the Milwaukee-area MLS, describes the trigger as technology used to modify listing photos “in a way that could mislead consumers,” and warns that from January 1, 2027, failing to disclose “may constitute a statutory violation.”

New York has a bill, not a law. Assembly Bill A11635, introduced July 29, 2026 at the request of Assemblymember Linda Rosenthal and referred to the Housing Committee, would add section 443-b to the Real Property Law. It closely tracks the earlier version of California’s bill, with two notable differences: it covers leases as well as sales, and it reaches sellers, property owners and property managers as well as brokers. It also separately covers “AI-generated” images, defined to include video. Disclosure would have to be “conspicuously located on or adjacent to each altered image,” with unaltered versions or a link to them on websites.

New York regulators haven’t waited for the bill. On November 13, 2025, the New York Department of State issued a trend alert warning that AI tools “may produce misleading or exaggerated representation of properties.” It reminded licensees that dishonest and misleading advertisements can bring discipline under Real Property Law § 441-c, that all ads must include “an honest and accurate depiction of the property being sold or leased” under 19 NYCRR § 175.25(c)(9), and that General Business Law §§ 349, 350 and 350-a separately prohibit deceptive acts and false advertising.

Elsewhere, Real Estate News reported in September 2026 that New Jersey is considering legislation to restrict AI-generated listing images and that New York City Mayor Zohran Mamdani has said he wants brokers to disclose AI use in listings as part of a renter-protection effort.

That is the whole statutory landscape: one state law in force, a second taking effect in January, and proposals elsewhere. Everywhere else, the rules that apply are older ones — and they matter more than most agents assume.

The Rules That Already Apply Everywhere

The absence of an AI-specific statute in your state does not make a misleading photo legal. Three layers of existing rules already reach it.

The Realtor Code of Ethics. Members of the National Association of Realtors are bound by the Code of Ethics, which in its version effective January 1, 2026 requires in Article 12 that Realtors “present a true picture in their advertising, marketing, and other representations.” Standard of Practice 12-10 extends that to “Internet content, images,” and prohibits “manipulating… listing and other content in any way that produces a deceptive or misleading result” and “otherwise misleading consumers, including use of misleading images.” The standard was last amended in 2018, before today’s generative AI tools, but it applies squarely. Article 2 separately requires Realtors to “avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property.” An erased crack in the foundation wall is a concealment problem before it is a photography problem.

State licensing and false-advertising law. Every state licenses agents and prohibits misleading advertising. California’s own pre-existing law, Business and Professions Code section 10140, already made false or fraudulent statements in real estate advertising a public offense punishable by a fine of up to $1,000 or up to a year in county jail, according to the Senate Judiciary Committee’s analysis. New York’s trend alert cites its existing rules, not new ones. “The lease and sale of real estate is governed by false advertising laws,” Santa Clara University law professor Eric Goldman told Straight Arrow News in September 2026, “just like all other goods and services in the marketplace.”

MLS rules. This is where enforcement is actually happening. Two examples show the range:

• Metro MLS in Wisconsin now requires agents to upload the original photo immediately before a watermarked altered version, to make the original unaltered photo the main listing photo, and to include the phrase “Photos are Digitally Altered” in the public remarks. Since September 1, 2026, altered photos without the required watermark are subject to a $10 sanction if removed, and a digitally altered primary photo draws a $10-per-day sanction until it is replaced.
• NorthstarMLS in Minnesota published guidelines on July 10, 2026 saying any virtually staged, AI-generated or AI-enhanced photo should be identified in the caption, on the photo or in the remarks, and paired with at least one unaltered “before” image of the same room. It goes further than California on substance: virtual staging may only add or remove personal property such as furniture and décor, and alterations that change or hide permanent elements — walls, floor coverings, doors, windows, roofing, siding, fireplaces, driveways — are prohibited outright, as are images depicting improvements that don’t exist.

Where the Rules Disagree

Read side by side, these rules don’t agree on what counts as an alteration, and the disagreements land exactly on the most common edits.

Skies. Metro MLS says no watermark is needed when the sky is adjusted “as long as the results remain realistic.” California’s statute covers elements “outside of, or visible from, the property,” and both HousingWire and Coraly flagged that this may reach a replaced sky. A Wisconsin agent and a California agent could make the identical edit and owe different disclosures.

Decluttering. Metro MLS says removing a yard sign, decluttering a room or taking photos off a wall doesn’t require the watermark, because “you are not changing the true and current condition of the physical house.” California’s definition covers any edit that removes “elements in the image,” with exceptions only for lighting, color and similar adjustments. A real estate photographer quoted by NAR made the case for caution: when AI removes a stack of moving boxes, it has to invent what was behind them, and “there could be anything behind those boxes — water damage, a hole in the wall.”

Fires in fireplaces. Metro MLS lets agents add a fire without marking the photo, so long as the fireplace works. Under NorthstarMLS’s guidelines, a fireplace is a permanent element that may not be altered.

Virtual staging itself. All of these rules treat labeled, furniture-only virtual staging as acceptable. They differ on the details: California requires a link to the original wherever the altered image runs, Metro MLS wants the original uploaded immediately before the watermarked version, and NorthstarMLS wants at least one unaltered image of every staged room.

For agents, the safe course is to follow the strictest rule that applies and to ask one question: does this edit change what a buyer will find at the showing? For buyers, a missing label tells you little. A photo with a new sky, a lit fireplace and no clutter may be fully compliant and still not show you the house.

Why Agents Edit, and What Staging Actually Buys

None of this means editing is the enemy. Presentation demonstrably matters. In NAR’s 2025 Profile of Home Staging, 83% of buyers’ agents said staging made it easier for a buyer to envision the property as their future home, 29% of agents reported that staging led to a 1% to 10% increase in the dollar value offered, and 49% of sellers’ agents said staging reduced time on market. Those are agents’ reported experiences, not controlled measurements, but they explain the incentive.

Physical staging isn’t cheap — the survey put the median cost of a staging service at $1,500 — which is why a virtual version is tempting. Yet 34% of sellers’ agents considered virtual staging less important to their clients than other marketing, while 88% rated photos much more or more important.

The survey also contains a warning that applies directly to AI edits. Forty-eight percent of respondents said buyers expected homes to look like those staged on TV shows, and 58% said buyers had been disappointed by how homes looked compared with those portrayed on TV. Television sets the bar; AI can fake clearing it; the showing reveals the gap.

The National Association of Exclusive Buyer Agents’ president, Benjamin Clark, put it more bluntly in a March 2026 statement: “You aren’t going to trick a buyer into closing the deal based on a digital illusion. They will see the reality the moment they walk through the door.”

What This Means If You Are Buying

The data says roughly one primary photo in ten has been changed and almost none say so. Assume the gallery is marketing and verify accordingly. Drawing on guidance from the New York Department of State and the National Association of Exclusive Buyer Agents:

• Read the labels and the remarks. Look for “virtually staged,” “digitally altered” or “digital rendering,” and note which rooms are affected. In California, an altered image should come with a link or QR code to the original; if it doesn’t, ask why.
• Ask for the originals. When a photo looks unusually perfect, have your agent request the unedited files in writing. A listing agent who kept them should be able to send them in minutes.
• Look for the tells. New York’s alert lists distorted or inconsistent details, blurry backgrounds and inconsistent window views, and notes that “real homes always have small imperfections.” Furniture that looks too small for the room, shadows that fall the wrong way and grass that is uniformly perfect are all worth a second look.
• Cross-check the outside world. Coraly found exteriors altered at nearly three times the rate of interiors. Compare the street, the neighbors and the view with satellite and street-level map imagery, and confirm window orientation at the showing.
• Get the floor plan. Ask for a floor plan with measurements or a 3D tour, and if you’re touring remotely, a live phone-video walkthrough. A virtually staged room tells you nothing about whether your sofa fits.
• Never pay before you see. New York’s alert advises never sending money or a holding deposit until you’ve met the agent and seen the property. Fabricated listings are a fraud vector too, as our guide to AI real estate fraud covers.
• Rely on the inspection, not the pictures. Photos show cosmetics; the seller disclosure and an independent inspector tell you condition. Our home inspection playbook explains what to look for and how to negotiate on findings.

Most edits are harmless — a bluer sky over a house you were going to judge on its roof anyway. The edits that matter are the ones that hide a condition you’d pay to fix: a removed utility meter or satellite dish, a repaired-looking wall, a view that is really a brick wall. Those are rare, which is exactly why they work.

What This Means If You Are Selling

If you’re listing, your agent is legally responsible for the photos, but you are the one who pays when a buyer walks in feeling misled. A disappointed buyer either leaves or recalibrates their offer down, and a listing that disappoints at showings tends to sit.

• Fix it, then photograph it. Decluttering, cleaning and curb appeal were the top three pre-listing recommendations from agents in NAR’s staging survey, at 91%, 88% and 77%. Physically doing them produces photos that need no disclosure at all.
• Ask your agent what was changed. Coraly’s researchers described the compliance gap as “not a will problem, but a workflow problem”: photographers deliver edited JPEGs with no record of what changed, and the originals are sometimes deleted. Make sure your agent requires the photographer to keep and hand over the unedited files.
• Use virtual staging where it informs. Staging an empty room to show scale helps buyers. Digitally replacing furniture that is already in the room, which describes 88.8% of the staged images in the Coraly sample, mostly sets expectations the showing can’t meet.
• Never hide a defect. Removing a permanent element or a known problem from a photo is exactly the conduct the Code of Ethics, state licensing law and every MLS rule above prohibit, whether or not your state has a new statute.

As our 2026 home seller’s playbook argues, pricing and condition sell homes; photos only get buyers through the door. Getting them there under false pretenses costs you a buyer who trusts what they’re seeing.

The Honest Bottom Line

AI photo editing is now routine in residential real estate, and the measured reality is less sinister than the “housefishing” headlines suggest. Most detected edits replace a gray sky. Kitchens and bathrooms, where renovations change value, are almost never touched in primary photos. The truly deceptive categories — erased equipment, renders posing as photographs — are a small fraction of a fraction.

The problem is disclosure, not editing. More than nine in ten altered images say nothing, and the rules that would require them to say something are a patchwork: one state law in force, one coming in January 2027, a New York bill in committee, MLS rules that disagree about skies, decluttering and fireplaces, and an ethics standard that already prohibits “misleading images” without spelling out what a disclosure should look like.

Expect that patchwork to fill in. California’s approach — label the image, link the original — is simple, is already being copied in New York’s bill, and gives buyers what they actually need, which is not a ban on editing but a way to see the house that is for sale. Until it is everywhere, the burden sits with the buyer: treat listing photos as an invitation to look, not as evidence of what you’ll find.