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 he or she were preparing to sell.  Who could blame the homeowner if they are feeling a bit smug?  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

And 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? 

The homeowner requests that the agent they select adjust their commision should this person buy their home, perhaps to the point of not charging a commission at all.  A competent agent explains to the homeowner that this potential buyer is referred to, among other things, as a reserve prospect.  

The Pitfalls

Now to the pitfalls and the information that a professional Realtor should explain to the homeowner:

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. The seller is likely to lose showings at a critical time, when the home first enters the marketplace, as some Realtors fear an “unlevel 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.

A realtor who does not take the care to share the above information with their client is generally either inexperienced or is taking the path of least resistance.  A realtor who takes the path of least resistance is never in the homeowner’s best interest.

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