Keller Williams Crossroads, Madison, WI
You may want to discuss with your current neighbor and have them talk with their agent or a real estate attorney. They are putting themselves in a very bad situation which may come back to haunt them at a later time if they do not disclose all defects. Sellers are required to disclose any defect.
If you are not a direct participant in the process, do you feel that the disclosure is a moral obligation?
Revisit the last question and do what you think is right.
Look at it this way - if you bought a home, and a neighbor came by to welcome you to the neighborhood and said, "Yeah, I guess you didn't know about (this huge problem) when you bought it," you might look at them and say, "Gee, why'd you wait 'til now to tell me!"