If you ask most agents this question, they will normally say that the bank has no duty to disclose. And, it is no uncommon that Banks and the listing agent will tell you the same thing. They are partially correct but the exception, can be a really big problem.
It is correct that there is a presumption that banks do not have any information about the property because they never lived there but there are two situations where this is not true.
- First, when the listing agent and bank asset manager first listed the property, there may have been some discussions about property condition. Also, there may have actually been inspections or repair work done prior to the listing.
- Secondly, a lot of these REO sales fall apart. If you are the 2nd Buyer, you need to find out if the first buyer did any inspections or the agent made any disclosures.
In both these cases, the Bank is legally liable to make this information available to the Buyer. In addition, if your state has a requirement that the agent make a visual inspection of the property, an REO sale does not relieve the Listing and Buyers agent from making a Visual Inspection of the property.
As I have said in prior posts, INSPECT, INSPECT, INSPECT.
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