As ChatGPT and other AI chatbots explode in the field, realtors must contend with an avalanche of “expert advice” filled with half-truths and misinformation. More than ever, realtors must be prepared to be trusted advisors to help clients avoid following misinformation generated by chatbots that can lead to litigation.
In Part 1 of this series, we looked at five common questions buyers ask their agents, the incorrect answers provided by ChatGPT, and the correct answers that competent real estate agents should make instead. Below are his five common seller questions that ChatGPT answered incorrectly.
1. Has the property been appraised recently?
Perhaps the most annoying thing ChatGPT and other chatbots do is hedge their bets by saying, “As a language model, I cannot provide legal advice,” and then quickly become legal advice. is to provide as much information as possible. The following paragraphs demonstrate this point.
As a language model, I cannot provide legal advice. However, in general, disclosure requirements regarding appraisals depend on the laws and regulations of the state or country in which the property is located.
So far, so good, but I would advise:
Therefore, listing agents should consult a licensed real estate attorney in the relevant jurisdiction for specific guidance regarding their disclosure obligations.
Agents are trained in their disclosure obligations and should check with their manager if they have any questions rather than hiring their own real estate attorney.
The following statement also has an additional error.
Some jurisdictions require sellers to disclose material facts that may influence a buyer’s real estate purchasing decision. A valuation can be considered a material fact if it provides information that may affect the price a buyer is willing to buy or pay for the property. In such cases, the seller may be required to disclose the valuation to potential buyers.
If there is uncertainty as to whether valuations need to be disclosed, listing agents should err on the side of caution and disclose it. Additionally, if the valuation is still relevant and reflective of the property’s value, we may share it with potential buyers to help support their asking price.
- Whether something is a “material fact” is a legal question. Agents should never attempt this determination.
- Appraisers typically use the Fannie Mae, Freddie Mac, FHA, or VA appraisal forms. These forms contain only three properties. Unfortunately, appraisers often choose comparison sales that are downright inappropriate. Additionally, their data is based on closed sales that are at least 60 to 120 days old. As a realtor, you have access to the latest sales information. In today’s volatile market, both clients and lenders need the most up-to-date sales data available to accurately estimate property values.
- The main reason we don’t rely on ChatGPT for appraisal advice is that ChatGPT is a large scale language model (LLM) rather than an appraisal AI or algorithm. A variety of AVMs from CoreLogic, HomeSnap, Realtor.com, Redfin and Zillow are based on advanced pricing AI algorithms drawn from a wide variety of data that LLM has not been trained on.
2. Should I disclose real estate issues to potential buyers?
GPT Correct advice:
Listing agents have a legal and ethical obligation to ensure that all material facts about a property are disclosed to potential buyers. A material fact is an issue that may affect the value or desirability of an asset. Therefore, the answer to the question “Do I need to disclose real estate issues to potential sellers?” is yes. Listing agents should advise sellers to disclose known issues with a property to potential buyers.
It is important that listing agents explain to sellers that failure to disclose material facts may result in legal and financial consequences, including potential lawsuits and failed sales. In the event of a problem, the seller may be held liable if the seller fails to disclose it in advance.
Where GPT went terribly wrong is in stating:
If sellers are unsure of what they need to disclose, agents can provide guidance on what is required by law and what is considered best practice in the local market. To protect both parties, it is important that agents document in writing all disclosures made by sellers.
Giving advice about what is required by law constitutes legal advice. Additionally, most states only require agents to visually inspect the property and report what they observe. no need to convert.
3. How big is the property?
ChatGPT seems to offer great advice, but it’s almost completely wrong.
As a listing agent, it’s important to collect accurate information about your property, such as the square footage of the property. If the seller gives you the square footage of your home, you can use that as a starting point, but you also need to make sure that that information is accurate. There are several ways to determine the square footage of a property, including:
- Measure your property yourself: You can measure your property yourself or have a professional measure it for you.
- Check public records: You can check public records, such as property tax records and building permits, to see if the square footage matches what the seller claims.
- Use Online Resources: There are several online resources that can provide property square footage information, such as Zillow, Redfin, and Realtor.com.
It is important to note that the accuracy of square footage information can affect the value of a property. As such, it is imperative to ensure that it is accurate. If you can’t verify the area, it’s best to disclose it to potential buyers and let them make their own assessments.
No business measures properties themselves, relies on sellers’ claims on lot sizes, or relies on Realtor.com, Redfin, or Zillow to pull square feet from MLS.
Whether you have square footage figures from your title company, county tax assessor, or other source, these figures will vary and both can be wrong. Always advise the seller not to quote where the area or boundary is on the premises.
When a buyer asks about these issues, the only correct answer is:
If you want to know the exact parcel size, area of improvement, or where the boundaries are, hire your own inspector and/or surveyor to make these determinations.
4. What are the fees and charges for selling my house?
ChatGPT duly advised agents to provide clear and transparent explanations of brokerage policies and fees. You also need to be honest about the costs of selling a home, including how commissions are calculated and distributed.
Selling agents must provide clear and honest communication with sellers about fees and commissions and ensure that all contracts are in writing and fully understood by all parties involved.
It was the next part of the response where GPT got derailed.
The Listing Agent must provide the Seller with a written Listing Agreement that clearly outlines all fees and commissions associated with the sale of the property. The Selling Agreement should also outline the obligations of the Selling Agent and the Seller, including timelines for completing inspections, repairs, or other requirements.
It is impossible to know all the fees associated with selling real estate. Much of it is regulated by his TRID, and agents must follow these guidelines exactly.
Additionally, there is no timeline in the Listing Agreement for completing inspections, repairs, or other requirements. All of these dates are negotiated in the Purchase Agreement, not the Selling Agreement.
5. How should listing agents disclose current property tax information on their listings?
GPT got this part of the answer to this question partially correct.
Listing agents are responsible for disclosing accurate and complete information about the property being sold, including current property tax information.
If the seller provides the agent with a copy of the previous year’s property tax county tax assessor/collector invoice, the agent may include that information if the field for that data is on the MLS listing entry sheet. can.
It is this advice that has made ChatGPT many critical errors.
One way to disclose current property tax information is to include it in your property listing description, along with information about potential tax increases. For example, listing agents can provide current property tax rates, property valuations, and estimated annual property tax amounts based on these figures. If the new purchaser’s property tax rate is expected to increase, the agency should also provide information on the amount of the expected price increase, the reason for the price increase, and when the new tax rate will take effect.
In addition to including this information in the listing description, listing agents should be prepared to discuss property tax information with potential buyers and answer their questions. By providing clear and accurate information up front, the buyer can make an informed decision about whether to purchase the property.
The main issues with this advice are:
- There is no place in the Exclusivity to state current property tax rates, property valuations, or estimated annual property tax amounts based on these figures. Also, there is no place in the MLS data entry sheet.
- Under most state agency laws, listing agents have fiduciary responsibilities to sellers, not to buyers.
However, the most obvious errors were the following two recommendations from GPT:
Listing agents should be prepared to discuss property tax information with potential buyers and answer their questions.
If a new buyer’s property tax is expected to increase, the agency should also provide information on the potential amount of the increase, the reason for the increase, and when the new tax rate will take effect.
Agents are prohibited from giving tax advice. Under no circumstances should you attempt to explain property tax increases, the reasons for tax increases, or when new tax rates will take effect.
If your state has a specific tax rate (for example, in California the property tax is 1.2% of the selling price), you can provide your clients with a link to the state’s property tax code. In other states where value is assessed on an individual basis, advise buyers to contact their city/county tax assessor for information regarding any property they intend to purchase.
As AI chatbots like ChatGPT become more prevalent in the real estate industry, it’s important to stay up to date on disclosure obligations and avoid legal and tax advice. This is the best way to provide our clients with accurate and reliable information and to avoid mistakes that can lead to costly litigation.
Bernice Ross President and CEO Brokerage UP and Real Estate Coach.comis a national speaker, author and trainer with over 1,000 published articles. Learn more about her broker/manager training program designed for women, by women, and for women here. BrokerageUp.com and her new agent sales training RealEstateCoach.com/newagent.