I have been investing in real estate for a couple of years and recently got my real estate license. I ran into the following situation a couple of months ago and am anxious to get your opinions.
Background
While a REO property was for sale, the sump pump failed. Before it was fixed, the basement flooded and a significant amount of mold grew throughout the house. The house went under contract shortly thereafter and someone began removing drywall, kitchen cabinets, carpet, etc and attempted to clean (not remediate) the mold. I don't know all of the background, but due to title problems, etc, the deal was never completed and collapsed 4 months later. The house was promptly relisted.
Question 1
When the house was relisted, the original pictures (pre-mold, pre-demo) were used and the listing simply stated "Nice home, needs some work." While the statement was factual, the pictures were very misleading. Additionally, there were still significant amounts of mold in the house. Does the agent have an ethical obligation to 1) disclose the mold in the listing or agent notes, and 2) portray the house accurately. Obviously, he wants to get as much traffic as possible for his client, but is this going too far?
Question 2.
If I was interested in purchasing the house, can I possibly formally complain about misrepresentation? A conflict of interest (whether real or perceived) obviously could exist.
I look forward to reading your comments.
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