Generative AI guidance

5. Generative AI is a type of AI that uses algorithms to create new ‘outputs’ or content (including creating text, images, video/audio). It uses ‘prompts’ (which are questions or instructions given by the user) to create content that closely resembles human-made content using large quantities of existing data or data that has been fed in. Gen AI tools are described as being “trained” with inputted information. They will also access sources across the internet for information.

6. In simple terms, traditional AI ‘recognises’, while Gen AI ‘creates’ new content based on its training data. There are a wide range of available Gen AI tools. These include paid, free, open-source and privately owned. Some better-known Gen AI tools include ChatGPT, Bing Chat, Google Bard, GitHub Co-Pilot, and Dall-E.

7. Gen AI is already being used in New Zealand and overseas to support business effectiveness and enhance service offerings to clients.

8. As with any evolving technology, opportunities for users are constantly evolving. In the real estate sector, Gen AI is already being used in a number of practical ways to enhance sales processes and customer interactions. Examples include:

• AI algorithms can analyse vast amounts of property data and market trends to generate property valuations; aiding real estate professionals in pricing strategies and negotiations;
• Virtual staging tools powered by Gen AI digitally furnish properties based on design preferences and market trends, allowing agents to showcase potential spaces to prospective buyers;
• Gen AI tools can be used to draft documents, including marketing scripts, email content, and other written material;
• Gen AI tools can be used for simple customer engagements, such as booking appointments;
• AI may be used to respond to frequently asked questions on real estate transactions, and to source publicly available information 

9. As Gen AI is rapidly developing, the use cases for these technologies will continue to evolve, and we expect to see more and more licensees using these tools to support their work. 

10. All licensees are responsible for the real estate services they provide including when they use Gen AI tools. While there may be a number of potential benefits associated with the use of Gen AI, there are also corresponding risks which should be taken into account and managed appropriately. 

11. From a regulatory perspective it is important to note that your obligations as a licensee under the Real Estate Agents Act 2008 (REA Act), and other legislation remain with you, even if you are using a technology tool as part of your work. Failure to meet legislative and regulatory requirements, and/or the expectations of your clients, could lead to customer harm, reputational damage, customer complaints and disciplinary action. The fact that any error was made by a Gen AI tool will not be a defence to any breaches.

12. Careful human oversight of the use of Gen AI is vital to ensure that it is used ethically and responsibly. As such, when using Gen AI, it is essential to ensure that you have sufficient safeguards in place to meet your legal and regulatory requirements.

13. Agencies and supervisors may also be held to account for breaches by salespeople and other staff members under your supervision. As such it is important that agencies and supervisors take the time to understand this evolving technology, understand how it is being used in the agency, and take steps to ensure that appropriate processes, policies, controls, and checks are put in place to ensure they are used appropriately and in a way that does not breach any obligations. 

14. The following section outlines some of the specific areas of risk for licensees using Gen AI and the associated regulatory and professional obligations. This is not a complete list and licensees should be alert to the use of Gen AI in all of their obligations.

Accuracy and completeness of information

15. All licensees have a requirement to exercise skill, care, competence and diligence at all times (rule 5.1). This creates a general responsibility for the quality and competence of the work you do, including in the production of customer facing documents such as appraisals and marketing materials and making sure you take the time to read and understand information about the property you are selling. 

16. When it comes to ensuring all parties have access to the right information, licensees have a broad range of disclosure obligations (e.g. under rules 6.4 and 10.7) alongside more general regulatory obligations around the accuracy and completeness of information including the prohibition on false and misleading statements under the Fair Trading Act.

17. Licensees also have obligations to ensure consumers are provided with guidance and information. For example, the obligation to ensure approved guides are provided alongside contractual documents, or to recommend that the customer or client seek legal advice. Licensees are ultimately still responsible for ensuring this information reaches the recipient even if the licensee is relying on Gen AI tools to send it out.

18. Improper, negligent or incompetent use of Gen AI could lead to a serious breach of these obligations. 

19. It is important to remember that while Gen AI can produce information, it does not have the ability to understand what it is producing, in the way a person can. Gen AI can therefore create inaccurate or false information. Gen AI can create content that may sound and look good but is actually inaccurate or incomplete. This can carry significant risks where technology tools are being used to generate things such as marketing materials or appraisals or where it is being relied upon to summarise information such as LIM or builder reports. It is important that, at the very least, where Gen AI tools are used steps are taken to fact-check the accuracy, relevance, and completeness of material produced.

Privacy, data protection, cyber security

20. The use of Gen AI involves inputting data into the tool. Be aware that the AI provider may well be able to see both your input data and the output that the tool produces. This can create a privacy risk and licensees should be mindful of their obligations under the Privacy Act, as well as their obligations around confidential information in the Code of Conduct (for example rule 9.17). 

21. Government guidance recommends against inputting personal and client information into external AI tools. Cybersecurity risks can also be associated with the use of Gen AI. CERT NZ provides tailored guidance and regularly updated warnings for businesses in relation to cyber security issues which agencies should be familiar with.

22. At the very least agencies should turn their mind to their obligations, any safeguards required, and what customer disclosure or consent is required.

23. The use of Gen AI has the potential to enhance the way that licensees deliver real estate services, delivering benefits both to real estate professionals and the clients and vendors that they work with. 

 Agencies

24. For agencies we recommend that you actively engage with your teams around the use of Gen AI tools, with a focus on:

• Understanding how Gen AI works and what its limitations are; 
• Understanding the legal, regulatory, and professional obligations that apply when using Gen AI; and
• Ensuring clear policies, processes and procedures are in place to cover the use of Gen AI including carefully managing confidentiality and privacy.

Licensees

25. For individual licensees we recommend that you:

• Understand your professional obligations, and how Gen AI may impact your professional and regulatory obligations; 
• Engage with your agency around the use of these technology tools, including adhering to any guidance or policies around the appropriate use; 
• Take personal accountability for ensuring any Gen AI tools you use are used appropriately. 
• Ensure that the interests of your customers and clients are protected, and high standards of service and conduct are maintained.
• Seek advice and guidance if you are unsure of the risk that might arise or how the risk can be mitigated.

• Law Society guidance: NZLS | Generative AI guidance for lawyers (lawsociety.org.nz)(external link)
• Privacy Office guidance: Office of the Privacy Commissioner | Artificial Intelligence and the IPPs(external link)
• Department of Internal Affairs: Guidance for use of Gen-AI in the Public Service(external link)

Download the AI Guidance PDF here.  [PDF, 1.1 MB]