Why don't foreclosures have disclosures?
The typical REO owner does not disclose anything, because doing so might infer that they know and have disclosed everything. Of course, they do not and cannot know everything about a house which they have not inhabited.
Any agent who shows an REO property should know that the property is being sold "Where is, As is" and should clearly warn a client of that fact and the implications.
Many of the questions that a buyer might have concern conditions that the seller does not actually know, such as broken water pipes. Most REO properties do not have utilities on when the bank finally takes possession, so the owner has no actual knowledge about the condition of plumbing.
When mold is present over a large area, often the REO company will require all who enter the property to sign a mold release--that's a pretty clear warning that a significant problem exists, eventhough the REO owner has not actually tested the discoloration.
Some other conditions are as visible to the buyer as they are to the property preservation vendor and listing agent, such as broken windows (which are often even boarded) and missing appliances. The most obvious message sent by the listing agent, in those cases, is the property condition. If the rating is "poor" or sometimes even "average," there are probably obvious repair issues. Most of the time when there are holes in the walls, for instance, the condition is rated as poor.
Latent defects that are not visible to the would-be buyer also are not usually known by the REO owner. Again, if the seller had filled out a disclosure, the buyer might very well assume that latent issues were disclosed. There simply is no reliable way for an absent owner to know all defects that a property might have.
Even the federal government recognizes the fact that an REO owner has limited knowledge of the property. Did you know, for instance, that REO properties are SPECIFICALLY EXEMPT from the federally-mandated lead based paint disclosure? I know that most REO owners go ahead and provide the form, but they don't actually have to do so. (Reference: HUD EPA Fact Sheet EPA-747-F-96-002)
The bottom line is that any agent who shows and any buyer who offers on an REO property must be prepared to schedule rigorous inspections.
PS: The obvious first answer to this question is that Missouri does not require ANY owner to actually fill out a disclosure.
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