When listing a property for sale many brokerages allow for the possibility that a seller can "reserve" a buyer, meaning the seller can create an option in the listing contract that if this certain buyer decides to buy the property, the seller will be able to sell to the prospect directly and save on paying the listing commission.
To enact this process the seller needs to provide the first and last name and contact information of the prospect. The reserve buyer's information is then written into the agreement. If during the listing period the buyer decides to buy the property, the seller can cancel the agreement and sell directly to the buyer without the aid of the listing broker. This arrangement is then noted on the MLS so that showing agents are aware of the possibility of a sale to a reserve buyer. Sellers generally cannot reserve buyers after the listing has been put on the market.
There are pros and cons to this process
- Seller can save money that might have been paid to a real estate broker.
- A prospective buyer may be able to get a property below list price.
- Seller will be unrepresented and will likely need to hire an attorney to handle parts of a sale.
- Buyer will be unrepresented and will likely pay more out of pocket for legal fees.
- Some agents will not show the property for fear that a seller will present an opportunity to the reserved buyer to buy the property at a more competitive price.
- Only a small fraction of reserve buyers ever buy the home.
For sellers considering reserving a buyer the best bet would be to contact the prospect well in advance of the listing date and give the buyer a deadline to decide whether they want to buy the home. That way the seller knows if the prospect is motivated or just wasting everyones time.
If the buyer professes to need more thime then the seller can reserve the buyer, but should time out the reserve period. For example, if the property goes on the market February 1st, the seller can time ou the reserve period at say March 31st. That way they give the buyer the opportunity to buy, but they don't hobble themselves for the entire listing period with a buyer that is not a serious prospect.
In the seven years I've been listing homes I've had at least a dozen or more sellers reserve prospects. In no case has the reserve buyer ever brought the home. A seller should consider carefully whether a person who expresses interest in buying the home is a bona fide purchaser or just a wishful thinker who may hampers their ultimate goal of getting the porperty sold.