Investor · Grand Rapids, MI · Member since 2015 · 24 posts · 8 votes
I'm preparing to show an apartment to several potential tenants tonight and I'd like to run credit/background checks on anyone who applies.
From the services I've explored, it seems your average suite of reports comes in around $35 per adult ($70 per couple). Do tenants ever have a WTF moment when they begin the application process and encounter these fees?
Obviously I have to run the reports, so it's non-negotiable, but curious what feedback you've encountered.
Investor · Cincinnati, OH · Member since 2014 · 61 posts · 35 votes
10y
I collect applications with a disclaimer that I select the best candidate based on the applications, then collect their app fee before running the checks. If everything on the application is truthful, I accept the tenant, sign a lease, and apply the application fee to their deposit. If anything in the application was misleading, I keep the fee, tell them why they've been denied, and move on to the next applicant.
Attorney · Attleboro, MA · Member since 2015 · 412 posts · 165 votes
10y
I see this started out in Michigan and then seemed to get a lot of Massachusetts responses. So this is for this from MA like Francisco - As a landlord you can not charge an application fee to the prospective tenant. You can not charge it and try to credit the security deposit. This is if you are the landlord renting directly. If you want to run some kind of check that costs you $$ then you have to eat it (charge more rent) so the thing to do is review the application first and see if it passes the sniff test ( does it appear they have enough income to afford the apartment etc) and then you can decide to spend the money if you want.
A court case came down a couple of years ago and they talked about what could be charged - first, last, security and key deposit.
That being said, a BROKER can charge an application fee. Many do not and will eat it as well (take it out of their fee for renting the apartment)
@Rich N., thanks so much for the pro tip! This is what I'm suspecting. Might you recommend anything I or others can read for further education?
In Mass a tenant group pout out a Tenant Survival Guide (I can't find my copy at the moment to give you an exact title) I got one and keep it in the office so I know the "enemies" battle plan. It is written in very plain language and talks about how to get the inspectional services involved and I think has copies of the relevant cases.
Real Estate Broker · Windsor, CT · Member since 2015 · 1k+ posts · 268 votes
10y
We charge $50 per adult. I usually tell them that upfront so there are no surprises. if the tenant isn't willing to pay the fee then I wouldn't entertain their application at all.
Real Estate Agent · Grand Rapids, MI · Member since 2014 · 493 posts · 200 votes
10y
This seems to be a Massachusetts post...but just in case you're still thinking Michigan. Application fees have been around for years in Michigan. There's not standard amount but most recommend at least covering the cost of the credit and criminal reports--if you've paying for those yourself. That cost could be around $25-$40 depending on what service you're using and what it all includes. Oh...and charge the amount per applicant. All the best!
Real Estate Investor · Boston, MA · Member since 2009 · 2k+ posts · 542 votes
10y
@Douglas Snook
"A court case came down a couple of years ago and they talked about what could be charged - first, last, security and key deposit.
That being said, a BROKER can charge an application fee. Many do not and will eat it as well (take it out of their fee for renting the apartment)"
Not exactly. according to the Massachusetts Commission Against Discrimination (at a HUD Fair Housing meeting I attended today at the Fed) you can charge a Tenant/Credit Check fee as long as you don't mark it up and you cannot charge an Application fee.
Personally I'd rather take on a Tenant's Attorney and Judge rather than MCAD any day;-)
I'm preparing to show an apartment to several potential tenants tonight and I'd like to run credit/background checks on anyone who applies.
From the services I've explored, it seems your average suite of reports comes in around $35 per adult ($70 per couple). Do tenants ever have a WTF moment when they begin the application process and encounter these fees?
Obviously I have to run the reports, so it's non-negotiable, but curious what feedback you've encountered.
Just my two cents here, but for myself, and my rental property, I consider it a cost of doing business. Realistically you can charge for a screening fee (assuming your state and local laws allow) but you will only be putting yourself at a disadvantage to other properties that don't. If you have the nicest property in the neighborhood, or have the time to wait, or are more concerned about $40 than missing out on tenants then maybe it is worth it to you to charge for screening. For me it's due diligence on the renter, and in my mind those costs should fall on me, not the renter.
I'm a little late to this party, but I think I might be able to help. I've done thousands of applications and here is a nice tip:
I charge $50 per applicant, but I tell them it is 100% refundable if they don't qualify as long as the answer everything TRUTHFULLY. This accomplishes 2 things
1-They tell me EVERYTHING. I mean, stuff that doesn't even pop up on a credit report. I have found out criminal, evection info, etc. that was never on the report. Tenants open up so they can get their money back if it doesn't work out.
2-I get so much honest info on the application, I don't process it unless I think they have a chance to qualify.
The fact that they have a chance to get their app money back makes them accept the $50 fee, as I recognize that it is on the high end. I can't tell you how many tenants have told me they have lost hundreds of dollars applying for units. It's not that they are terrible people, it's just that PHX has been a white hot market and you can get 5 people applying on one property. 4 people are going to lose out on that.
So for me, I don't feel good taking app money from 10 people when I know only one will get it. Thats why I have set it up to be refundable if they don't get it. I think it's a good way to do business and also get the most accurate info from the tenant possible!
PS- I use Appfolio, they charge $15 a credit report (credit, credit score, eviction, criminal, public record, etc.) For those paying $40+, check around. There are better deals!