What must a licensee do if they discover a material defect in a property they are selling?

A licensee must fully disclose any material defects in a property they are selling to potential buyers because ethical and legal standards in real estate emphasize transparency in transactions. A material defect refers to any issue that significantly affects the property's value or poses an immediate risk to buyers.

By disclosing these defects, licensees adhere to their fiduciary duty to act in the best interests of their clients while ensuring that buyers are fully aware of potential issues that could affect their purchasing decision. This practice protects both the buyer's interests and the integrity of the real estate transaction.

In contrast, ignoring the defect if the seller requests it undermines this ethical responsibility and could lead to legal repercussions for the licensee. Fixing the issue before showing the property could be ideal, but it's not always feasible or necessary. Additionally, discussing the defect privately with the seller does not fulfill the obligation to inform potential buyers, leaving them uninformed about critical property information. Thus, the requirement for full disclosure is both a legal imperative and a best practice in real estate transactions.