BROKER RISK MANAGEMENT
Weekly Practice Tip
Artificial intelligence (“AI”) is a very useful tool currently being utilized by many real estate agents. However, there are some risks affiliated with the use of AI of which agents need to be aware. Please consider the following scenarios:
SCENARIO NO. 1: I am a real estate agent and use AI to create a fictitious home to use in my marketing materials. Is there any risk in using this picture?
RESPONSE: A fictitious home may not be marketed as if it were a true or real home. If an agent utilizes, whether on social media or in other advertising, a fictitious home and markets it as if it is a real home, there is exposure to both the Department of Real Estate (“DRE”) and civil liability. Another concern is whether a home created using AI software creates a copyright issue. Agents may not use copyrighted photographs or other pieces of art developed by another artist without their permission. It is unclear as to whether a home created using AI software would have a copyright. This is an undetermined area of the law for which there currently is no guidance. Therefore, agents need to be cautious in utilizing fictitious homes in advertising they have created using AI.
SCENARIO NO. 2: I regularly print statistics and articles and distribute it as part of my marketing materials. Recently, I have used AI to draft those marketing materials and statistical charts. Is there any risk in utilizing AI for these purposes?
RESPONSE: Yes. AI is a fabulous tool to draft marketing materials, but many times statistics provided by AI are not accurate. If you are going to use AI to create marketing pieces containing statistical information, it is important that agents verify that this information is accurate.
SCENARIO NO. 3: I have used AI to prepare and assist me in drafting disclosures. Is there any risk?
RESPONSE: Yes. In an experiment, BRM asked a disclosure legal question of AI. The answer was approximately 90% accurate, but gave an inaccurate conclusion. Therefore, using AI to prepare disclosures or answer disclosure questions is risky and should not be undertaken.
PRACTICE TIPS:
- Agents need to be cautious in creating fictitious homes on AI and using them in their marketing materials. It is likely acceptable to use them as background for marketing materials, so long as the AI software does not indicate any copyrighted material in its software creations.
- Agents should not market fictitious homes they have created on AI, as it is likely a violation of DRE advertising guidelines, National Association of Realtors’ Code of Ethics, and there can be civil liability for false advertising.
- Agents should be cautious in using AI to create marketing materials, particularly with regard to statistical information. If AI is used in this regard, agents should double-check the statistics and figures.
- Agents should not use AI in preparing disclosures.
- AI does not replace an agent’s common sense and good judgment. AI should not be used to replace judgment regarding disclosures or recommendations made to clients.
This Weekly Practice Tip is an attorney-client privileged document for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.