A colleague showed me something last week that made me uncomfortable. An AI tool that could take a photo of an empty, dated room and render it with modern furniture, fresh paint, even different flooring.

The “after” image looked like a completely different property. It was also, technically, a photo of the actual room—just with AI-generated enhancements layered on.

This is the new reality, and we need to talk about it.

What AI Photo Tools Can Do Now

The capabilities have exploded in the past year. Current AI editing tools for real estate can:

Virtual staging. Empty rooms filled with furniture—not 3D renders, but photorealistic composites that look like real photography. Multiple styles available instantly.

Sky replacement. Overcast day becomes blue sky with perfect clouds. Every exterior shot looks like it was taken on an ideal weather day.

Decluttering. Remove personal items, mess, and distractions. The original room might have toys scattered everywhere; the listing shows clean surfaces.

Green grass. Brown lawn? Now it’s lush and healthy. Dead garden? AI makes it bloom.

Colour grading. Consistent lighting and colour across all images, even when the actual property lighting varies dramatically room to room.

Renovation visualisation. Show what the property could look like with updated kitchen, different floors, extended living area.

The Line Between Enhancement and Deception

Here’s where professional judgment matters.

Generally acceptable:

• Virtual staging of empty rooms (clearly labelled as such)
• Removing temporary clutter that won’t be present at inspection
• Colour correction to match what the eye sees in person
• Minor blemish removal (small stain, scuff mark)

Increasingly questionable:

• Sky replacement that misrepresents typical conditions
• Grass enhancement significantly beyond actual state
• Removing permanent fixtures or features
• Significant colour changes to walls or surfaces

Clearly problematic:

• Removing structural issues or defects
• Adding features that don’t exist
• Changing room dimensions or proportions
• Misrepresenting the property’s actual condition

The Legal Framework

NSW fair trading laws require advertising to not mislead or deceive. This applies to photos as well as text.

The question isn’t whether you used AI—it’s whether the buyer would be misled about what they’re purchasing.

If someone inspects a property expecting the green lawn in the listing and finds dead grass, they’ve been misled. Whether you achieved that green lawn through careful photography timing or AI editing doesn’t change the misleading outcome.

REIV has guidelines on property advertising. They’re worth reviewing, though they haven’t fully caught up with AI capabilities yet.

The Practical Problem

Here’s what’s actually happening in the market: some agents are using heavy AI enhancement. Their listings look better online. They’re getting more clicks, more enquiries, more open home attendance.

That creates competitive pressure. If you’re showing honest photos next to heavily enhanced competitors, your listings look worse by comparison.

But the buyers showing up from enhanced listings are often disappointed at inspection. And disappointed buyers are a waste of everyone’s time.

A Sensible Approach

My recommendations for agents navigating this:

Label virtual staging clearly. “Virtually staged” isn’t a shameful admission—it’s professional transparency. Most buyers understand and appreciate it.

Use enhancement to show potential, not to deceive. A renovation visualisation that shows what the kitchen could look like is helpful. A photo that hides water damage is fraud.

Match photos to inspection experience. If buyers will be surprised (negatively) when they walk in, you’ve gone too far.

Keep original files. If a complaint arises, you want to be able to demonstrate what was changed and why.

Discuss with vendors. Some vendors push for aggressive enhancement. Explain the risks—to their sale and to your reputation.

Where Technology Is Heading

This problem is going to get worse before it gets better. AI tools are improving rapidly. Within a year or two, AI-enhanced photos will be virtually undetectable as manipulated.

The industry will likely need explicit standards. What types of enhancement require disclosure? What’s prohibited entirely? These conversations are just starting.

Until then, individual agents need to make judgment calls. Competitive pressure towards enhancement will continue. The best defence against it is building trust through transparency—a reputation for honest representation has value precisely because not everyone has it.

The Vendor Conversation

When vendors ask for heavy photo enhancement, I have a direct conversation:

“We can make these photos look incredible. But when buyers inspect and see something different, they lose trust. Offers drop. Negotiations get harder. I’ve seen enhanced listings sit longer than honest ones because the inspection disappointment creates hesitation.”

Most vendors get it when you frame it as protecting their outcome, not just your ethics.