Homebuyer Trust in AI Has Collapsed — and Two-Thirds Want Mandatory Disclosure

By Hector Herrera | May 11, 2026 | Real Estate

Consumer trust in AI as a homebuying tool has fallen from 30% to 16% in a single year, even as AI becomes more embedded in real estate transactions — generating property valuations, filtering listings, flagging inspection risks, and drafting offers. A new survey finds that the industry's race to AI-enable the transaction is running well ahead of what buyers are willing to accept.

The gap matters because real estate is the largest single financial transaction most people ever make. When confidence in the tools advising that decision drops by nearly half in twelve months, the industry has a credibility problem that can't be solved with better product design alone.

What the Survey Found

According to Real Estate News, the survey of prospective and recent homebuyers found:

• Trust in AI to assist with homebuying: 16% — down from 30% in 2025, a 47% relative decline in one year
• 66% say transparent AI disclosure is important or essential — they want to know when AI is involved in advice or decisions affecting their purchase
• 37% say disclosure should be legally mandatory — a significant minority seeking regulatory solutions to a trust deficit that voluntary industry practices aren't fixing
• 44% say they would pay a professional specifically to verify AI-generated decisions — signaling not just skepticism but willingness to spend money on a human check

These numbers describe a population that is simultaneously experiencing more AI in real estate transactions and trusting that AI less. That's not a paradox — it's what happens when exposure to AI outputs without transparency erodes confidence.

Why Trust Is Falling

Several factors are driving the decline:

AI valuation errors have real consequences. Automated valuation models (AVMs) — the AI-generated property value estimates produced by Zillow, Redfin, and lender platforms — have faced increased scrutiny after high-profile errors in fast-moving markets. When an AVM overestimates a property value and a buyer borrows to that number, the error translates to a financial gap they bear.

AI-generated listing content is now common and often misleading. Many real estate platforms allow agents to use AI to generate property descriptions. Buyers who encounter descriptions that oversell a property's condition — and then tour the home — associate the disappointment with AI, not with the agent who accepted the AI output unchecked.

Opaque decision-making in mortgage underwriting. AI is increasingly used in the pre-qualification and underwriting pipeline, but borrowers rarely know which specific inputs drove an AI recommendation or denial. Opacity breeds distrust, especially in high-stakes decisions.

The hallucination problem is now public knowledge. Headline-level awareness that AI systems can generate plausible but false information has made consumers broadly skeptical of AI outputs — including in contexts where the AI may be performing accurately.

The Disclosure Gap

The survey's disclosure findings are politically significant. When 37% of homebuyers say AI disclosure should be mandatory, that's enough of a constituency to drive state-level legislation — and several state attorneys general are already investigating real estate AI practices under existing consumer protection laws.

The current industry standard is inconsistent. Some platforms disclose when valuations are AI-generated; many don't. Most AI-assisted listing descriptions carry no disclosure at all. Mortgage underwriting AI operates behind a regulatory framework — the Equal Credit Opportunity Act and Fair Housing Act — but those frameworks were written for human underwriters and apply imperfectly to AI systems.

44% of buyers willing to pay for human verification of AI decisions is a market signal worth taking seriously. That's not a fringe position — it's nearly half the surveyed population telling the industry that they don't trust AI outputs enough to act on them alone.

What This Means for Real Estate Professionals

For agents, brokers, and platform operators, the survey data suggests several practical implications:

• Proactive disclosure is becoming a competitive differentiator. Agents who clearly communicate when and how AI is involved in valuation, search, or document preparation may build trust that opaque competitors lose.
• AI outputs need visible human sign-off. Buyers want to know that a human reviewed and stands behind AI-generated recommendations. Presenting AI analysis as a starting point — not a conclusion — changes the trust dynamic.
• The "AI-free" option has market value. 44% of buyers would pay a premium for human verification. Some real estate professionals are already positioning this as a service offering.

For technology vendors building AI into real estate platforms, the trust collapse is a product risk. Platforms that become associated with AI errors in real estate transactions face the same reputational dynamics that affected Zillow after its 2021 iBuying algorithm failures — a cautionary case that the industry has largely moved past without resolving its underlying cause.

What to Watch

Watch state legislatures. Given the 37% mandatory disclosure sentiment, expect real estate AI disclosure bills in the 2027 legislative cycle, likely modeled on the automated decision-system disclosure requirements already moving through Connecticut, Colorado, and California. The National Association of Realtors will face pressure to get ahead of state patchwork with voluntary national standards.

Also watch whether lenders respond. Mortgage underwriting AI sits at the center of the most consequential decisions in real estate transactions. If the trust gap expands into that domain, the regulatory consequences will be more immediate than anything driven by listing descriptions or property valuations.

Source: Real Estate News