How do you handle multiple applications for one unit?

18 Replies

I'm not sure of the proper procedures for processing (say that 3x's fast) applications. I received an app 5/30 and another today 6/3. The first applicant said she could have the hold fee 6/6. I still have to do my due diligence on the second. 

The question is, if second applicant checks out do I need to give first applicant 'first right of refusal' or offer to the better of the two per my requirements or advise both they are approved and 'whoever submits the hold fee first gets the unit?

On paper the 2nd tenant appears to be the better choice based on credit history. 1st appears better on ability to pay. Both have been on their job for quite some time.  My question is less about which to choice but more about the proper order of things.

Another question I just thought of... how do you handle applications when you have just one unit available? If you take an application and are currently reviewing, do you continue taking applications (not saying stop showings), thereby taking application/credit check fees? Or do you hold off on processing (or for those who have the applicant apply online, do you have them hold off until a decision is made on the current application)? 

some state laws may vary si check that first but you should have a list of qualifying criteria and if you decline an applicant you probably need to notify them in writing citing the reasons why. Depending on the property we generally tell qualified applicants that if they qualify the only way the unit can be held is if they pay the deposit and if another qualified applicant pays the deposit first they won't get in. This should also be listed on your application criteria. 

Hi Arthur - I am a Broker and routinely represent landlords.  I usually suggest to my clients that they advise a cutoff date and/or # of applications they will accept.  This will give you time to complete your due diligence and make an informed decision.  You only need to advise applicants that you are reviewing applications and when you anticipate making a decision.  Hope that helps and good luck!

Tonya Smith, Sheffield Realty Group

@Arthur Banks undefined

Make sure you have a written set of criteria when processing applicants so you can stay out of the soup if a tenant ever tries to accuse you of violating Fair Housing laws.  

Some people process applications in the order they are received.  I do not do it this way.  I look to see who I think is most qualified based on their application and then I go through verifying all of their information. (employment, income, background, etc)  If everything checks out, offer that person the unit and ask for a deposit.  Keep showing the unit and/or taking applications until you have that deposit to hold the unit. 

I'm not a lawyer but I don't think you generally need to inform every tenant why they did not qualify.  If you disqualify them because you ran a credit report and that was the reason for denial, I know you need to inform them of that and also provide them with a copy of the credit report. 

If I accept one tenant before running a screening report on a second tenant, I refund the second tenant's application fee. Also, if I look at an application and decide the tenant can't afford the rent or there is some other problem before I run the screening report, then I refund the application fee. There's no guarantee of first come, first served, and there's no guarantee that an application fee, once paid, will be refunded. I just try to pick the best tenant available within a reasonable time and charge others only when screening them costs me money.

Congrats. What a good problem to have...multiple good applicants. We've dealt with similar cases and just like everyone else has suggested, be clear and up front with the candidates. Keep showing until that fee is in hand. When there are tons of interested parties we allow a pre-lease option (pre-walk through). Those tenants tend to be proactive, super responsible, and score the best. If we get to the showing date and have two or more we run through the traps and make the best choice on paper. Tell me the truth and if they're worth renting to they'll understand the process is necessary. Best of luck!

@Brandon Siewert @Tonya Smith @Darren Budahn @Dawn Anastasi @Bob H.

 @Jason Churchill

Thanks all. My question really is should I have not let the 2nd applicant spend the money to complete the credit check until I gave 1st applicant the opportunity to give me the hold fee?  And if they didn't give the fee  by 'such and such' time, then run 2nd applicant. Or have everyone apply and if approved let them know that and give to whoever gets fee in first? Or approve based on a scale and offer in that order with a 'pay fee by such and such day' and go down the list?

I just hate to see someone lose their money if I knowingly have a qualified applicant (albeit one that hasn't paid the fee yet). 

If I should've waited, I'll suck it up and refund the fee out of my pocket and chalk it up as a learning experience. But if the proper way to conduct business is to have everyone interested apply until a fee is paid/lease signed, then I'm ok with that.

So should I have waited to have 2nd applicant apply?

Originally posted by @Darren Budahn :

@Arthur Banks

...  If you disqualify them because you ran a credit report and that was the reason for denial, I know you need to inform them of that and also provide them with a copy of the credit report. 

Most providers of credit reports will restrict you from providing the applicant with a copy of the report; instead, the adverse action letter you send should advise the applicant how they may obtain a free copy of the report. I used to say "all providers", but somebody on BP has identified a service and shown the agreement where this was allowed - so check the agreement with your service provider as to whether you are allowed to give a copy. 

@Arthur Banks I am assuming you have not stipulated whether app fees were refundable or not.  I believe it is a matter of preference as to how to accept apps.  I have encountered LLs that process one app at a time and review them FIFO.  This removes you from holding unnecessary fees; however, it can burden and delay your review process.  Typically, I prefer apps with a processing fee and advise that it is refundable if another applicant was selected, you have secured the agreement and rec'd the security, if no expenses have been incurred.  If the approved applicant does not provide the security by the agreed date, you can move on to the next app with fee in hand once you reconfirm they are still interested. 

Thanks again all.  @Steve Babiak thanks for the articles. It seems like what I should've done is take the application, start processing but NOT run/have them run the credit report until needed. E.g. declined the applicant before them. I just had another applicant call to make arrangements to drop off their application. I'll take it, along with the app fee and hold it until I know whether I need to pull the report. Are many of you charging a processing fee on top of the cost of credit pulls?

A good problem to have, but a problem nonetheless @Arthur Banks .  I screen pretty extensively through e-mail before folks see the property. Sending out proper rejection letters is a pain!  In my CL ads, I ask several questions they must answer prior to my even responding via anonymous CL e-mail.   Not trying to be evasive, just efficient.  In a hot market with a few dozen rentals I self-manage, got to gain every efficiency possible.

In a multiple app situation, I do a first-come, first-serve and have my qualifications on paper, including tie-breakers. I consider all applications gathered on the same day to be 'first'.  I do credit screening last, after the basics, including a free criminal back-ground and sex offender check.  Anyone in a back-up position is told so, pending performance of the primary.  If the primary is approved and submits a holding fee, I refund the app and fee to the back-up.  Basically what most people do probably! 

We do a tenant screening interview before showing and before taking an application and application fee. We accept multiple applications within a given time period. We review them and rank them according to our rental criteria, most qualified on top. We first verify rental history, employment/income, and contact personal references. Then we run the credit and legal reports (for which we pay a fee). 

We fully process only one application at a time. If they pass, then we offer to rent. If they are not prepared to go forward, we go on to the next applicant. I would not stop advertising but if I'm already processing an application, I will ask my tenant screening questions and add them to a wait list for a follow-up if the current applicant does not work out. 

The key is to be open and honest about your process with all prospective renters. If we do not use the application fee to run the credit and legal reports, then we return it. If we reject an applicant after fully processing their application, we send an Adverse Action Notice as required by our state law. The Adverse Action Notice indicates the general reason for the rejection.

Originally posted by @Steve Vaughan :

... Sending out proper rejection letters is a pain!  ...

Seriously? After all, it's just a form letter.  And after you have it once, it's pretty much just a matter of changing name and address. 

I consider it a pain, yes @Steve Babiak .  A proper rejection letter, in compliance with the fair credit reporting act, where if at all you pulled credit reports from, whether to list the reason for rejection at all if it wasn't credit related or require them to submit the request in writing within 60 days, etc.  I have 3 standard letters I pick from depending on what the reason for rejection was.   Forgive me if it's not my favorite thing to do.  I just got a thumbs down! 

First consider, what is the date of the application and then when is it complete?

EG:  I vet all the user data before a ask for the CR.  During this period, the application is incomplete to me as I don't have enough info to act upon.  Any delay in verifying employment, income, prior landlords comments just keeps the application in pending/incomplete status.  Due to inability to talk to the necessary persons to perform this vetting, I drop the current into the Pending file and pickup the next and iterate on this process.

Once the personal vetting is done, then use your written criteria to be sure the applicant "qualifies" and if not, reject here and do not pull the CR, send the rejection letter.

If tenant qualifies to this point, your evaluation becomes depend upon the CR and BG(background) reports.  If the CR can be taken in an affirmative status, you're done, offer the apt and inform all others that "another applicant has qualified and offered the apt'.