Final answer:
A real estate agent failing to disclose material facts such as flood marks on a property may be sued by the buyer for misrepresentation or nondisclosure. The agent can be found liable, potentially resulting in compensation to the buyer for various damages.
Step-by-step explanation:
When a real estate agent fails to disclose known defects such as flood marks on the walls in the basement of a property, and the buyer subsequently discovers these issues, the buyer may have grounds to sue the agent. In the real estate industry, nondisclosure of material facts - that is, facts that could affect a property's value or desirability - can lead to legal action against the agent. Real estate agents must disclose any known defects to potential buyers. If an agent intentionally conceals defects or is negligent in discovering them, they may be found liable for misrepresentation or nondisclosure. This could result in the buyer receiving compensation for damages, which can include the cost of repairs, diminution in property value, or some cases, rescission of the contract.