Saw is located, we hear (7)
I believe the answer is:
'saw' is the definition.
(saw -> seen -> sighted)
'located we hear' is the wordplay.
'located' becomes 'sited' ('site' can be a synonym of 'locate').
'we hear' indicates a 'sounds like' (homophone) clue.
'sited' is a homophone of 'SIGHTED'.
'is' acts as a link.
(Other definitions for sighted that I've seen before include "Glimpsed" , "Seen" , "able to observe" , "with a view?" , "Spotted" .)