AI Virtual Staging Disclosure Rules: What Agents Need to Know

Virtual staging used to mean a designer adding furniture to an empty room over a few days. AI tools now furnish a room, repaint the walls, swap the flooring and green up the lawn in seconds, which makes it easy to slide from showing a home's potential to misrepresenting it.

California now has a law aimed at digitally altered listing photos, and the REALTOR® Code of Ethics and MLS photo rules apply to AI edits as well. Here's what each one asks of you, plus a checklist to run on every listing.

Not legal advice. Check your state rules and your broker.

Is virtual staging legal?

Yes, when it's disclosed and accurate. Adding labeled furniture to show how a room could be used is generally fine. The risk starts when you change the property itself: hiding a crack, removing a power line, making a room bigger, adding a view that isn't there.

A simple test: would a buyer who visits the home feel misled by the photo? If so, don't publish it.

California AB 723

California's AB 723 was signed on October 10, 2025, and added Section 10140.8 to the Business and Professions Code, effective January 1, 2026. It applies to real estate licensees, and anyone acting on their behalf, who use a digitally altered image in advertising or promotional material for a property for sale.

It requires:

1. A statement that the image has been altered, reasonably conspicuous and on or next to the image.
2. A link, URL or QR code to a publicly accessible website that shows the original, unaltered image and clearly identifies it.
3. If the ad runs on a website the licensee controls, the unaltered versions of the images in the posting itself.

The law defines "digitally altered" as an image changed with photo editing software or AI to add, remove or change elements such as fixtures, furniture, appliances, flooring, walls, paint color, landscaping, the facade, floor plans, or elements outside or visible from the property.

Common adjustments that don't change how the property is represented are excluded. That covers lighting, sharpening, white balance, color correction, angle, straightening, cropping and exposure.

In practice, a plain brightness fix in California needs no disclosure. A virtually staged living room needs one, along with a way to see the empty room.

The NAR Code of Ethics

REALTORS® in every state are already covered by the Code of Ethics. Article 12 requires a "true picture" in advertising and marketing. Standard of Practice 12-10 extends that to internet content and images, and it prohibits manipulating content in a way that produces a deceptive or misleading result.

An undisclosed virtually staged photo, or an edit that hides a defect, can fall under that standard even if your state has no law on altered photos.

MLS photo rules

Most MLSs have photo rules, and many address virtual staging directly. Rules you may see:

• Label virtually staged photos, on the image or in the caption.
• Mention virtual staging in the remarks.
• Include at least one unaltered photo of each staged room.
• Don't alter permanent features of the property.

These rules differ from one MLS to the next and get updated, so read your MLS's current photo policy before you upload. If you belong to more than one MLS, follow the strictest one everywhere.

Federal advertising law

The FTC Act prohibits deceptive acts and practices in advertising. A photo that misrepresents a material fact about a home can be deceptive regardless of the tool that produced it. State consumer protection laws work the same way.

What's safe to change, and what isn't

With disclosure, these are generally fine:

• Adding furniture, rugs, art and decor to empty rooms.
• Replacing dated furniture with modern pieces.
• Showing a possible use for a room, such as an office instead of a guest room, clearly labeled.

AB 723 excludes these, and most MLSs don't ask for a label (check yours):

• Lighting, exposure, white balance and color correction.
• Straightening and cropping.

These are high risk or off-limits:

• Removing or hiding defects like cracks, stains or water damage.
• Removing fixed elements such as power lines, cell towers or neighboring buildings.
• Changing flooring, countertops, cabinets or paint without clear disclosure.
• Adding a view, pool, landscaping or square footage that doesn't exist.
• Replacing the sky or season in a way that misrepresents the setting.

A virtual staging disclosure checklist

Run this on every listing with edited photos:

1. Label every altered image "Virtually staged" or "Digitally altered," on or next to the image.
2. Keep the originals of every photo you edit.
3. Publish the originals alongside the staged versions, or link to them. California requires it, and it's a good habit everywhere.
4. Note in the MLS remarks that some photos are virtually staged.
5. Leave the structure alone. Walls, windows, floors, fixtures and views stay as photographed.
6. Never hide defects.
7. Check your MLS rules and your broker's policy before uploading.
8. Apply the same rules on every channel: MLS, portals, your website, social posts, flyers and video tours.
9. Tell your seller which photos are staged and why, so buyer questions at showings don't catch them off guard.