A consensus is forming across Canada’s real estate industry about where to draw the line on artificial intelligence-altered listing photos. 

AI tools can brighten a dark room, swap a grey sky for a blue one, stage an empty space with furniture or even erase a major defect. The industry broadly agrees on which of those is ethical or not. However, standardizing rules and enforcing them consistently is still a work in progress, and rulemakers are racing to adapt as technology – and its adoption – grows rapidly. 

 

Where the line is

 

Michael Thorne, a trainer with Buffini and Company who runs AI-focused sessions for real estate professionals across North America out of Langley, B.C., has a rule of thumb he teaches: enhance for clarity, never fabricate reality, always disclose. 

“We never edit things that change the buyer’s understanding of the home. We never want to edit for condition, for view, for lot lines or for defects,” he said.

Essentially, leaders and regulators across Canada have boiled it down to this: AI can ethically be used to show the potential of a space, but not to change the perception of its existing condition.

One important condition is disclosure. Thorne says a good example is posting two photos side by side, an AI-staged version, for example, and the original. 

“We are showing very plainly this is what it could be, and this is what it is,” he said. “As we disclose what we’ve done, we are keeping the trust and confidence of the public.”

The regulatory language from the B.C. Financial Services Authority backs that up. Licensees have a general duty not to publish advertising containing false or misleading statements, and that duty extends explicitly to AI-generated materials. Agents are accountable for whatever AI tools produce on their behalf. 

In 2024, BCFSA upheld a $6,000 penalty against Lori Evans, a Kelowna-based agent, after a hearing found that listing photos had been digitally altered to hide peeling paint and show furnishings that didn’t exist. Evans had asked the regulator to reconsider the fine. The request was denied.

The B.C. case is not an isolated one. In February, according to a CTV News report, a Quebec agent and his agency apologized after a listing photo for a single-family home in Terrebonne was found to have been edited using AI to add windows, make the garage door appear larger, add a fence and bushes, remove a door and illuminate the home’s interior lights.

Josianne Villeneuve, a director with Remax D’ICI, made a public apology, telling CTV, “The modifications made exceed what is acceptable, and the photo should not have been published.”

The agent who posted the photo has no penalties against him, according to the registry of Quebec’s real estate regulator.

 

Where rules exist, and how they’re enforced

 

The Calgary Real Estate Board (CREB) overhauled its AI policies last year to reflect the growing adoption of these fast-developing tools. 

According to CREB’s standards, virtually enhanced photos are prohibited on the MLS system if they misrepresent a property in a way that would affect its value. Virtual staging with realistically sized, unattached furniture is permitted, but must be disclosed in the public remarks on the listing.

Non-compliant images are being flagged on a weekly basis, according to CREB chair Susanita de Diego. 

Many are caught through CREB’s own member practice advisors, who sometimes spot non-compliant images while investigating other listing issues. Members can also report each other, though de Diego says that’s not the main source.

The board’s response follows an “inform then enforce” model: a first offence brings an educational advisory, with escalating financial penalties for each subsequent violation. A fourth occurrence triggers a disciplinary hearing, though de Diego says it hasn’t reached that point, to her knowledge.

“Errors are usually unintentional, and usually they’re corrected very quickly by the listing agent,” she said. “It’s an opportunity for us to educate.”

CREB told Real Estate Magazine it does not disclose the dollar amounts of the financial penalties.

Asked whether brokerages should have their own AI policies, de Diego noted that CREB doesn’t involve itself in brokerage business decisions, but in her opinion, “From a common sense approach, absolutely,” she said.

The Toronto Regional Real Estate Board (TRREB) has similar prohibitions. CEO John DiMichele confirmed in an email that limited adjustments, such as colour correction, brightness modification, contrast enhancement and virtual staging are permissible, provided such edits do not materially alter the factual accuracy of the image or misrepresent any feature, condition, or view of or from the property.

“If it is discovered that inaccurate photographs appear on the system, members will typically be provided an opportunity to rectify the issue. Should the behaviour repeat, the matter will be escalated to the Professional Standards Hearing Roster for further consideration,” said DiMichele.

 

Where the rules run out

 

Go up a level and the picture changes. The Canadian Real Estate Association (CREA) and Realtor.ca do not regulate AI use in listings.

CREA’s Realtor Code includes articles on advertising accuracy that could theoretically apply. CREA told REM these provisions “may be engaged” by misuse of AI, but the code doesn’t address AI directly, and CREA does not monitor how members are using it. The national body points to provincial regulators and local MLS rules to fill the gap.

At the brokerage level, Thorne is concerned about the level of agents that may be operating without any AI policy at all.

Thorne has seen that reality in-person. Speaking recently to 250 broker-owners in Texas, he asked how many had AI policies in place. Two hands went up. 

He senses Canada is doing somewhat better, “but I don’t have hard data on that,” he said, adding there are a lot more brokerages that don’t have an AI policy than do. “We certainly aren’t doing enough. I think behind the scenes, we’re probably trying, but it’s happening so fast. So fast.”

He said this creates room for interpretation when it comes to liability. 

 “When something goes wrong, who’s on the hook? The agent that went outside the guidelines and the policies of the office they work at, or the broker who didn’t put guidelines in place?”

It’s that without clear guidance from above, agents at the leading edge of adoption are making their own rules, he cautions.

“If there are not guidelines in place set by the industry, then agents that are moving quicker than organized real estate will get left to try to figure out the way that they want to do things,” Thorne said.

The tools to undermine trust are already widely available, but the rules to govern them are still catching up.

“We have to move faster than we’re moving,” Thorne said. “It’s a big topic, and it’s moving fast, but that does not excuse us from staying on top of it.”