Selecting between 2 applicants

7 Replies

Received 2 applications for tenants today for one of my houses.  The first applicant seems to barely meet my requirements (primarily income requirements) and the second meets and exceeds the requirements by a significant amount.  I have a feeling the first applicant will end up being a one year and out tenant and the second has already stated they would likely be 3+ years. 

I would very much prefer to offer the lease to the 2nd applicant, but not sure how I would go about denying the 1st since they meet my minimum requirements (though it is by the slimmest of margins).    What options do I have when I run into this situation?

You are legally allowed to "rank" tenants based upon their info. I know some say to avoid discrimination claims the first to apply is the one you accept. You can also avoid discrimination claims by choosing the best by objectively ranking them based upon your approval criteria. As long as you "grade" them all the same way then you've applied your criteria indiscriminately. (I'd say income level should be fairly high on your ranking)

When I have multiple applicants I first "rank" them based on the paper app info they've given and "fit for the property" (IMO your desire to stay 3+ years vs 1 is a better fit for my property) which doesn't cost me or them anything but 15-20 minutes.  I process the highest ranked and the tenant pays the application fee online. Should they pass I allow them first stab at the property.

If they are ready to pay a holding deposit/security I call the other back and let them know they're in holding until I know if the first is actually going to come through. I'll only wait about 24 hrs before I start processing the second and letting the first know that I'm proceeding to the next applicant. Both know that during that time it's whoever comes through with the money first that gets the property.

The longest I waited on an approved applicant was 4 days, only because she was out of state and mailed me a check. I was willing to wait because she sent 1st/last/ 1 month SD to hold it until she moved in 10 days later.

So your situation tenant 2 gets more points in income/length of stay and the other barely squeaks by....

There's no law that says you have to accept the first qualifying application.  Some people do because they're worried about being accused of discrimination.  But if you are evaluating the applicants on legitimate/lawful criteria and one clearly comes out as the stronger candidate, then by all means choose that one. 

If it were me (and I've had almost this exact scenario), I would choose the second one and explain to the first that they were not selected (I wouldn't say they were "denied") because I chose another applicant who wanted to stay longer (which is something that is important to me since turnover is one of my biggest costs).

Keep it simple but be straightforward with them.

Thanks for the quick and concise replies!!

Matt, question for you about your application process.  Do you collect the application fee from all applicants at the time the application is submitted or after you have "ranked" the applicants?  In other words, do you run the credit check for all applicants or only for the chosen applicant?

To answer your question about taking application fees from all applicants: I tell everyone that wants to apply, to go ahead and fill out the online application and submit supporting documents (pay stubs, photo i.d., etc), but don't pay the fee yet. I want to look over their application first. If they obviously won't qualify due to the info on their application, I tell them so and don't take their money. If it looks good on paper, then I have them pay for the background check.

I use smart move here on BP which has the option for the tenant to pay for the service directly. I generally only run the credit on one at a time.

The thing is for me the credit/background check is the final confirmation of what I generally already know. The steps I take go something like this:

1) What is the stated income vs rent

2) What if any specific negative/positives are on the app

3) What did they say their length of stay at past rentals was

4) Are they missing any important info (this is actually kind of done as I do 1-3)

5) Look them up on the county's court filing records in the three nearby counties (I'm about 5 minutes in now)

6) Now I verify their income with their employer/pay stubs ect, call current LL ect

7) Send them the credit/background check email and have them pay the fee. Assuming everything else was good now I'm looking for things they hid (criminal, eviction in another state) or poor credit profile. I don't care too much about score (within reason) I'm more concerned with total debt and current payments. 

Hope that helps. I did lots wrong for a long time before I figured out how to get good tenants and not spend too much time/effort on the less qualified ones.

Thanks again Matt!!  I definitely have some adjusting to do to my process.  I feel I'm spending an inordinate amount of time in the selection process.  I'll check into SmartMove and see if that might make some of the process a bit easier. 

Matt, you might want to check your tenant landlord law to see if it dictates whether applications are required to be processed in order, seems like this can vary by area.

I have a scoring system.  If they survive the first pass, I move forward with the background check and rescore.  Highest score gets the offer.  One of the attributes is how long they intend to stay, which is on my application.

Just on the surface,t he first one seems like they might stay longer.  We have found that people with higher income don't stay long, unless there is another reason they can't qualify to purchase or to move elsewhere.  Candidates who appear too strong can often be too good to be true for a variety of reasons.

Don't be discouraged on how long tenant screening takes.  it is one of the most important decisions you will make, take the time to get the right tenant.

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