AI can make any home look stunning. That’s the problem.

Sid Sarasvati was director of engineering at the real estate brokerage Compass when he noticed a rampant problem: the “imagination gap.”

“The problem I kept seeing was: Buyer walks into a dated kitchen, can’t see past the oak cabinets, agent loses the deal,” he says.

To close the gap, he built Renovate AI: an artificial intelligence platform that takes sad listing photos and spits out fully staged, renovated versions complete with a cost breakdown so that “you’re not just dreaming, you’re budgeting,” says Sarasvati.

Launched in 2023, Renovate AI now adds 70,000 new users a month—and it’s just one of a wave of AI tools transforming homes in seconds. The catch? They’ve opened up a whole new can of problems.

Dazzled…or duped?

“The clear win is cost and speed,” says Sacramento, CA-based real estate investor Pratik Pathapati, who uses AI tools to jazz up photos of his flips. “Physical staging can run $3,000 to $6,000 and take days to pull off, while AI delivers the same look for under $100 in minutes.”

But he’s also seen the downside: “Some buyers feel duped when they tour a bare house that looked fully furnished online.”

To be fair, real estate photos have never been entirely realistic. Wide-angle lenses have long made shoebox rooms look spacious, while flash lighting can make interiors appear brighter than they really are. Still, there’s a difference between flattering and fabricating—and once buyers feel deceived, the deal is usually dead.

AI-altered photos have spawned a new term: housefishing, using deliberately doctored listing photos designed to reel in buyers. California has responded with a law requiring disclosure of digital alterations, and other states could follow suit.

Bottom line: AI is a tool for vision, not deception. Disclosing alterations is a must, and while swapping out paint colors or staging furniture is fair game since buyers can change those anyway, digitally erasing foundation cracks goes too far. To soften the transition between the listing pics and reality, include the original photos alongside the AI-enhanced ones; you could even add the cost to bring that vision to life.

“AI visualization is more honest when you pair every image with a cost estimate. You see the dream and the price,” says Sarasvati. “That’s the difference between inspiration and a business plan.”