Final answer:
A licensee must disclose material, adverse information about a property that they are aware of. Sellers can reassure buyers by providing inspection reports and offering warranties to reduce information asymmetry. Transparency about the property's condition helps ensure a fair deal.
Step-by-step explanation:
When dealing with imperfect information in property transactions, a licensee is required to disclose any material, adverse information that they have actual knowledge of concerning the physical condition of the property. This includes any significant defects or issues that could affect the property's value or desirability. The licensee must act in good faith and with honesty, which dictates that not all information that could possibly concern or be assumed about the property needs to be disclosed, but rather those material facts that a reasonable person would want to know when making an informed decision.
To reassure potential buyers in a situation of asymmetric information, a seller can take several steps. For example, they could provide a home inspection report, offer warranties, or be transparent about any known issues with the property. Since asymmetric information refers to a situation where one party has more information than the other, decreasing this information gap increases buyer confidence and could facilitate a more equitable transaction.