The Pitfalls of a Reserve Prospect

It’s not unusual for a  homeowner to feel quite proud and secure as they ready to place their home on the market with the knowledge that there is someone who purports to be very interested in purchasing it.   This is someone who contacted the homeowner directly, hearing “through the grapevine” that the homeowner(s) were preparing to sell.  Who could blame the homeowners if they have feelings of exhilaration?  Their home is their pride and joy, and if they could save thousands of dollars by selling it to someone direct and avoiding a Realtor’s commission, then why not?

Reserve Prospect

Who could argue with a homeowner’s strategy of simultaneously placing their home on the local MLS while their own direct buyer gets their plans in order – actually signing an agreement, arranging for and completing inspections, applying for financing and perhaps even readying their own home for sale?

Whatever Realtor they contact, if he or she is competent and well versed in the law, will explain to the homeowner that this potential buyer is referred to, among other things, as a reserve prospect.

The Pitfalls

Following is a perspective and information that a professional Realtor should share with the homeowner under such circumstances:

1. The fact that there is a buyer exclusion for the property must be indicated on the listing and made known to the other Realtors according to the laws of the MLS.

2. Hence the seller is likely to lose showings at a critical time, when the home first enters the marketplace, as some Realtors fear an “un level playing field” between the seller’s direct buyer and any buyer procured by the MLS.

3. The many nuances involved in navigating the sale of a home from contract to close without the support of a realtor can actually cost a home seller many more thousands than they plan on saving, particularly when considering the high percentage of direct deals that never materialize.

The more information that you are equipped with when entering such an agreement, the more likely your experience will be a successful one.

What other pluses and minuses can arise with a direct sale?