Wisdom of the Crowd vs. AI Influence:The Role of Image Manipulation in Real Estate Valuation

This paper investigates the influence of AI-enhanced images on real estate valuation through the lens of the Wisdom of the Crowd approach. Participants were asked to estimate the value of a residential property based on original images and later on AI-manipulated images (e.g., improved interior design). The study involved 109 participants, divided into three groups: experts (real estate appraisers), semi-experts (bank employees with market insights), and laypersons(individuals with general local knowledge). The initial valuations across all groups showed no significant differences, indicating a stable Wisdom of the Crowd effect. The mean valuations were €283,000 for experts, €289,000 for semi-experts, and €273,000 for laypersons, with variance decreasing as participants’ expertise increased. After viewing AI-enhanced images, significant shifts in valuation occurred: laypersons and semi-experts exhibited highly significant changes, with mean differences of -€42,400 and -€40,375, respectively, while experts showed a smaller but still significant adjustment of -€11,600 on average. These results demonstrate that AI-driven image manipulation can substantially impact property valuation, particularly among non-experts. This highlights the importance of standardized image presentation in real estate to ensure unbiased assessments. Furthermore, the findings support the superiority of non-expert groups in Wisdom of the Crowd-based valuation, provided external influences such as image manipulation are minimized.