Observed to be soundly located (7)
I believe the answer is:
sighted
'observed' is the definition.
'soundly located' is the wordplay.
'soundly' shows a homophone (sound like).
'located' becomes 'sited' ('site' can be a synonym of 'locate').
'sited' sounds like 'SIGHTED'.
'to be' acts as a link.
(Other definitions for sighted that I've seen before include "Glimpsed" , "Saw; able to see" , "Noticed" , "Viewers are" , "Saw, observed" .)