Rejecting Prospect Tenant (Non Refundable Application Fee)

55 Replies

Should my rejection letter read something like this:

We're sorry to let you know that the property at [address] is no longer available. At this time we've rented this property to other applicants. Thank you.

Do I need to add a reason why their application was declined? In this case it's income and employment is 3 months. 

good question, any thoughts? What did you decide to do?

I always tell potential  tenants upfront the basic requirements for getting into my rental. The income and job history for sure. I also make it very clear that any of the criteria we discuss verbally before taking the application fee will not change. I also make it clear that I am going to pick the tenant I feel meets all of my criteria the best. If they still choose to have the application processed and they are declined I always let them know why. Most likely It will be one of the criteria they were made aware of when we first met at the property for a walkthrough.

I always try to discuss these points with them on the first phone conversation before we even meet at the property, I don't understand why so many still look at a property and waste money on application fee's  when they should already know they will not qualify.

IMO you should explain why their application is rejected, especially if you plan on keeping the non-refundable application fee. If I paid to apply and got the letter you wrote in response, I'd think you took my application knowing full well that the unit was likely taken, but wanted to collect my application fee anyways.

If you're refunding the fee you probably have more flexibility.

I would just come out and say "you didn't meet our ____X rent income requirements. Anything else can sound a little hinky.

And I don't understand why being on the job 3 months is a problem. Does this tenant not have any previous work history? Is he moving for a new job in your town? Is he a recent graduate with a new job?

If you're going to insist on X number of years on the job, you're going to eliminate a huge chunk of your potential tenant pool.

@Ayodeji Kuponiyi , if I took an application fee and did not return it, I would feel obligated to inform the applicant why they were denied. 

 It's bad enough they didn't get the house.  Shelter is a basic human need and they didn't hurt you by applying. So instead of coming here to ask how you should phrase your rejection letter designed to keep their money why not just return it.

You wouldn't like it if it were done to you and you wouldn't like it if it were done to your child.

@Account Closed the fee was used to run a backround check so I can't refund it back.

@Randy E. some investors told me not to go into much details. I went through the criteria with them and when i ran a background on them, I found out they lied on their application.

@Chris McDaniel I simply told them "thanks for your interest at 123 Main Street, unfortunately you're application was incomplete and you did not meet our criteria. Best of luck on your search."

Income is a pretty clear one, so you can state that if you chose to do so.  One criteria where you are required to reveal is the reason is if it is based on credit.  

Don't do the background check until they meet all your other criteria. This way you can refund their fee having not already wasted it on a background check you did not even need.

I would tell them why you are not accepting them.  How are they supposed to attempt to better themselves if they do not know why they cannot rent your property?  I agree not going into a lot of info and keeping it simple.  Lying on the application is a big deal to me, I don't like starting a relationship with someone with lies.  

@James Wise That's  a cost of doing business as a landlord.

Non-refundable application fees encourage two deplorable habits. Using it as an income earner which is just exploitative and deplorable and using it to run your application process like a beauty paegeant. Non-refundable means even if you didn't spend the time or money on the application you keep it.

@Jason C. Exactly. 

Originally posted by @Account Closed :

@James Wise That's  a cost of doing business as a landlord.

Non-refundable application fees encourage two deplorable habits. Using it as an income earner which is just exploitative and deplorable and using it to run your application process like a beauty paegeant. Non-refundable means even if you didn't spend the time or money on the application you keep it.

It's also the cost of wanting to rent a house. It's a business, not a charity.

If you think $40 is an 'income earner' then it's a hard income to earn. The house has to be advertised, 1 in 2 people won't show up for their appointments, only 1 in 3 will put in an application, so after spending 8 hours running around trying to earn $40?? Are you for real?

Non refundable doesn't mean you keep the application fee if you didn't run it - as that's theft. Non refundable means that if you fail the application, then you aint getting the fee back.

Originally posted by @Account Closed That's  a cost of doing business as a landlord.

Non-refundable application fees encourage two deplorable habits. Using it as an income earner which is just exploitative and deplorable and using it to run your application process like a beauty paegeant. Non-refundable means even if you didn't spend the time or money on the application you keep it.

I disagree.

A tenant who is denied after paying the fee has no-one to blaim but themselves.

We have a lot of units so we do a lot of applications. We explain what the criteria is and time and time again tenants say their credit is great or their criminal history is perfect and they pay their fee. Great tenant is good to go so long as the reports reflect what they have told us.

Then the reports come back....Multiple pages of accounts in collections or a criminal history.

The idea behind the fee is

A. To cover your costs 

B. To screen out,the unqualified applicants immediately so they do not waste your time. Even with the application fee many clearly unqualified applicants apply hoping they will slip through the cracks.

I imagine anyone doing a heavy volume would agree with me on these points.

James Wise, Real Estate Agent in OH (#2015001161)
216-661-6633

@James DeRoest

If you can't absorb the time or the $40 to process  an application then you ain't got much of a business and a charity would be letting the house rent-free.

On that note why don't we charge job applicants the cost of setting up and running their interview - after all it's the cost of running a job and most employers aren't charities either.

Aside from that the last thing I need is some disgruntled applicant lobbing a brick through a  window in my property because they've had their money kept and been jerked off by some anodyne rejection letter.

Here's the content of our response form: Just check the box and send the notice! 

RENTAL APPLICATION REPLY

(Adverse Action Notice)

Date______________________

Attention: ___________________________________________________:

Thank you for your application(s) to rent one of our rental properties. We regret that we

were not able to rent to you at this time, for the following checked reason(s):

 The rental was committed to another party at the time we received your application.

 You indicated disinterest and/or declined our offer of the rental unit.

 You tentatively qualified, but the rental was given to another party with equal or

better rental qualifications, or to another qualified party that applied earlier.

 You needed to meet our conditions on rent, deposit, co-signer, use, or other.

 You did not provide requested documentation in a timely manner.

 Previous landlord/other references failed to provide needed timely information.

 We were not able to hold the rental until the date you were able to pay the deposit

and/or initial rent, assume tenancy, or meet other stipulated conditions.

 You did not meet requirements on pets, occupancy, smoking, cars, or other terms.

 You did not meet our standards for references, income, felony, credit, history, etc.

 Your application was denied based upon a written credit report with optional FICO

score; directions to receive a copy may be obtained by contacting us below.

 Your consumer/credit report did not contain sufficient information.

 You submitted an incomplete, inaccurate, unclear, or unsigned application.

 You did not provide a phone number, call back, or return our calls or emails.

 You did not submit the required screening fee.

 Other_____________________________________________________________.

Submitted Screening Fee:

 Since your submitted fee was used in the processing of your application, we regret

that we are not able to return any back to you

 Since your submitted fee was not used in the processing of your application, we are

returning/refunding your payment totaling $ _________________.

Federal and State guidelines limit us from giving further details other than name, address,

and phone number of any consumer reporting agency resulting in denial (by contacting us

below for a free report copy with right to dispute). Thank you for your consideration.

______________________________________________ _______________________

Originally posted by @Account Closed :

@James DeRoest

If you can't absorb the time or the $40 to process  an application then you ain't got much of a business and a charity would be letting the house rent-free.

Here's the score honey, you want to rent my house, you pay me an application fee so that I can check you are worth renting to. Those are the rules. Suck it up.

Can't afford $40? Probably can't afford the rent either.

@James Wise

I don't agree with the idea of running a business  in a way that punishes people who apply for what I am offering. That and a bunch of other things I guess are why we have a waiting list of applicants - referrals from existing tenants calling us up asking if we have a property we can rent to them - not even caring what side of town it is.

If you have a process that explains your criteria it's not hard to turn that into stage 1 of the screening phase whereby people unlikely to qualify are identified and dissuaded from applying. 

If despite explaining your criteria you keep processing unqualified applicants then (just like if you are an employer and keep getting unsuitable resumes) something you are doing isn't working and I believe one can do better than shrugging because you've charged  a non-refundable fee. 

Originally posted by @James DeRoest :
Originally posted by @Ihe O.:

@James DeRoest

If you can't absorb the time or the $40 to process  an application then you ain't got much of a business and a charity would be letting the house rent-free.

Here's the score honey, you want to rent my house, you pay me an application fee so that I can check you are worth renting to. Those are the rules. Suck it up.

Can't afford $40? Probably can't afford the rent either.

 I am not your honey. If you can't absorb $40 you ain't much of a businessman.

Originally posted by @Account Closed :
Originally posted by @James DeRoest:
Originally posted by Ihe Onwuka:

@James DeRoest

If you can't absorb the time or the $40 to process  an application then you ain't got much of a business and a charity would be letting the house rent-free.

Here's the score honey, you want to rent my house, you pay me an application fee so that I can check you are worth renting to. Those are the rules. Suck it up.

Can't afford $40? Probably can't afford the rent either.

 I am not your honey. If you can't absorb $40 you ain't much of a businessman.

 If you can't afford $40, you ain't solvent.

But it isn't $40.

It's $40 times however many applications need to be submitted in order to get a house, some of which they will be rejected for even though they qualify because landlords have taken non-refundable fees and are running the process as a beauty paegeant.

Originally posted by @Account Closed :

But it isn't $40.

It's $40 times however many applications need to be submitted in order to get a house, some of which they will be rejected for even though they qualify because landlords have taken non-refundable fees and are running the process as a beauty paegeant.

I agree with your sentiment about the process being run as a beauty paegeant being wrong, but that's not what your ire was about.

And although it's not just $40, but $40 per adult, considering each adult must have some sort of income these days, it's still not a large amount of money.

Originally posted by @Ayodeji Kuponiyi :

@Account Closed the fee was used to run a backround check so I can't refund it back.

@Randy E. some investors told me not to go into much details. I went through the criteria with them and when i ran a background on them, I found out they lied on their application.

@Chris McDaniel I simply told them "thanks for your interest at 123 Main Street, unfortunately you're application was incomplete and you did not meet our criteria. Best of luck on your search."

Read up on FCRA (Fair Credit Reporting Act) to find out why your simple response to the tenant is inadequate.

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