California's AB 723 Is About Trust. Here's What It Means for Builders.

On January 1, 2026, California put a new section into its Real Estate Law. It's short, it's specific, and it exists for one reason: buyers were looking at listing photos that didn't match the homes they walked into, and the legislature decided that was a problem worth writing a statute about.

AB 723 is a disclosure law. Nothing in it says you can't virtually stage, can't edit, can't render. It says that when you do, you tell the buyer, and you show them the real photos alongside it. That's a trust rule, and it happens to land squarely on how home builders market inventory.

Below is what the law says, what the MLS rules say on top of it, and where we think builders should be paying attention. We are not attorneys. We are a photography services company that has spent years inside builder marketing, and we've read this carefully. Take this to your legal team; our perspective is just the starting point, not legal advice.

What AB 723 actually requires

The law is Business and Professions Code §10140.8. The operative sentence:

"A real estate broker or salesperson, or person acting on their behalf, who includes a digitally altered image in an advertisement or other promotional material for the sale of real property shall include in the advertisement or promotional material a statement disclosing that the image has been altered and a link to a publicly accessible internet website, URL, or QR code that includes, and clearly identifies, the original, unaltered image."

Two obligations, then:

1. Label the altered image, conspicuously, on or next to it.
2. Make the original available, by link, URL, or QR code. On any website you control, post the originals in the listing itself or link to them.

"Person acting on their behalf" is the phrase that pulls in vendors. Your photographer, your staging company, your marketing team are all inside the law when they produce images for a licensed agent's listing.

What counts as "digitally altered"

The statute defines it as an image:

"...that has been altered through the use of photo editing software or artificial intelligence to add, remove, or change elements in the image, including, but not limited to, fixtures, furniture, appliances, flooring, walls, paint color, hardscape, landscape, facade, floor plans, and elements outside of, or visible from, the property, including, but not limited to, streetlights, utility poles, views through windows, and neighboring properties."

Virtual staging is in. Sky swaps, power line removal, virtual landscaping, sales office garage conversions: all in.

What's out:

"'Digitally altered image' does not include an image where only lighting, sharpening, white balance, color correction, angle, straightening, cropping, exposure, or other common photo editing adjustments are made that do not change the representation of the real property."

Normal processing is fine. The test is whether the edit changes what the property looks like in person.

The penalty

AB 723 lives inside the Real Estate Law, where a willful violation is a misdemeanor. The Department of Real Estate can discipline the license of the responsible agent or broker. The statute doesn't set its own dollar fine, but the MLSs did (more on that below), and undisclosed alterations give a buyer a cleaner path to a misrepresentation claim.

What the MLS added on top

The California Regional MLS (CRMLS), which covers most of the state, wrote its own Rule 11.5.2 to mirror the law and published compliance guidance. The practical requirements:

• Label altered photos in the description field as "digitally altered," "virtually staged," or similar.
• Place the original, unaltered photo immediately before or after the altered one in the photo set.
• Violations get a warning first, then a $250 fine if not corrected.

CRMLS also went further than the statute in two places builders should note:

• Virtual landscaping that the seller won't actually install cannot be posted to the MLS at all, even if labeled.
• Under its truth-in-advertising rules, users cannot add, remove, or modify real parts of the property (wall color, flooring, cabinets, wall dimensions, landscaping) in listing images.

And a line that predates AB 723 entirely, from CRMLS Rule 11.5(c): media must be a truthful representation of the property "in all respects, including... the interiors." Hold onto that one.

Where this hits home builders

Representative photography

Here is what we see across the industry: some of the largest homebuilders have stopped photographing individual listings. They shoot a model once and run those photos across every home, every community, every listing. From an accounting standpoint, this is a sound decision. Photography is a line item, and eliminating it saves a considerable amount.

From the buyer's side, it degrades trust. A buyer who is seriously interested goes to the listing portal, then to your website, to learn about a specific home. When they see the same living room on eight different addresses, two questions surface in order.

First: why aren't they showing me the real property?

Second: what does this one actually look like?

Neither question moves them toward a contract.

Now, the law. AB 723 does not cover unaltered representative photos. A straight photo of a different completed home hasn't been edited, so it isn't a "digitally altered image." Nothing in the statute requires photos of the actual property, and nothing in it prohibits listing with renderings or model photos. CRMLS's own rules explicitly allow a rendering to satisfy the mandatory exterior photo.

But that's the narrow reading. The broader one is that AB 723 exists because regulators are now paying attention to the gap between listing images and reality. Representative photos live in that gap. CRMLS's "truthful representation... in all respects, including the interiors" rule is already there. General misrepresentation law is already there. A model-home interior presented as the listed home, with no label, is outside AB 723 and inside everything around it.

The fix is not complicated: label representative photos as representative. "Representative photo of Plan 2 model, not the actual home." It costs nothing, and it answers the buyer's first question before they ask it.

Virtual staging

Our position is simple. Any time virtual staging appears in your marketing, it should be labeled as digitally enhanced or virtually staged. There is no situation, at no point in a transaction, where misleading a buyer helps you. AB 723 now requires this in California; we think it's the right practice everywhere.

We also believe high quality virtual staging is one of the most important missing pieces in how builders present inventory. An open floor plan photographed empty is a set of large featureless rooms stitched together on a listing. It creates more questions than answers. Where does the sofa go? Is this a dining room or a den? Can my king bed fit in here?

The fundamental job of a listing photo is to show someone what a property looks like and what it can do for them. If a buyer can't picture their life inside your home, they have no reason to reach out. Staging, done well and labeled honestly, closes that gap. AB 723 doesn't threaten that. It just insists that the buyer knows which image is the vision and which is the room.

Renderings

Renderings built from plans, not from an edited photograph, appear to fall outside AB 723's definition (the statute covers images that were altered, not images created from scratch). A rendering composited onto a real site photo, or produced by AI-editing a photo of a model, is a different story and likely covered. We haven't seen DRE or a court address this, so treat it as unsettled and label renderings as renderings regardless.

The takeaway

AB 723 is a small law with a clear message: show buyers the real home, and when you show them something else, say so. Builders who already label their representative photos and their staging are essentially compliant. Builders who reuse model photos across dozens of listings with no label aren't violating AB 723, but they're standing in exactly the spot the law was aimed at, and the MLS rules were already there first.

We're not attorneys. If any of this raises questions about your current marketing, hand this write-up to your legal team and let them take it from here.

Sources: AB 723 full text, CRMLS Digitally Altered Image Guidance & FAQs, CRMLS Rules & Policies