If that’s the case, who is responsible?

Thanks in advance for your responses.

But the auction company says the seller won't reduce the price at all.Given that I had already spent around $1000 on preliminary title and survey,  I offered to get full survey and title work done to prove to seller (although it seemed like they already knew b/c 3 deals on this same property had fallen through previously), provided that the seller would agree to pay for it if we couldn't agree on a price reduction after that. 

Unfortunately the title report and survey show an easement that will prevent this. 

I appreciate the response!!

Having said that, IMO and training, Seller in receipt of a previous Inspection report has a responsibility to disclose to a potential Buyer.

(See American Housing Survey Reveals Rise in Doubled-Up Households During Recession and For Many Families, Bad Times Require 'Doubling Up'.)And there was also a fear about jobs/income and credit.

This is a great Question and as you can see in responses, every market is different, some markets are seeing a slowdown and in other areas are still crazy.

Should I reach out to other agents before jumping and doing business with the first agents response?

@Mike Cumbie your response to @Dave Carella was spot on from this broker's perspective. :)I used to list, negotiate and represent buyers of short sales back in the hey day of the market crash.