Selecting candidates in stages, inform only at the very end?

Question

Hello,

My current tenants are leaving at the end of the month and have put the property on the rental market. I don't want to disturb the current tenants with just curious viewers, so I have informed everyone interested in the property that I will be doing only one showing at a later date, but for screened applicants only.

But I don't want to show to those that I can see are not good candidates, only to those that pass my requirements. Is that OK? I know the rule is to treat everyone the same, and I of course, plan to do that.

1. Should I rephrase that? I mean to say "to screened applicants who are selected to the next phase of the process."

2. Should I inform the screened applicant who was not a good candidate that he hasn't made it to the next phase, or simply not contact him for a viewing and then at the end of the month inform him as everyone else that he hasn't been selected? Basically, I feel sorry to not let him know for 3 weeks, given that I know he is not going to be selected.

3. Is it completely OK that I don't schedule viewings with applicants that are not good candidates?

In particular, one bad applicant applied before I put up the minimum requirements on the ad (something I did with your help :), so he may feel, "hey, you didn't tell me." This was my very first applicant, the only one I have talked to on the phone (the day I put up the craigslist ad, before I posted on zillow, etc.) and he mentioned that his credit was not good, whether he should apply. I only said, "well, you will be at a disadvantage, but you can always apply" (knowing, as I do, that you should let everyone apply).

Thanks!

Nathan Gesner · Answer

@Maria G. there are three credit reporting agencies: Experian, Equifax, and TransUnion. They are usually pretty close but may differ a little. I doubt you would see one of them report a 550 while the other two report 650.

As with any rule, you always have exceptions. I recently rented to someone with a terrible score but everything else was really strong with a couple years of good rental history, solid employment, and their credit report showed they were paying all their bills. I feel it's important to look at the whole person.

Thomas S. · Answer

Do not be afraid to operate your business to your best advantage. Fear is not a foundation for doing business.

Establish minimum standards and never waver from them or you will be placing justifying your standards at risk. Set them and stick to them.

You should definatly be posting your minimum credit score requirements when advertising. A minimum of 600 is OK if you own a C class property but if you are anywhere above a C (C+, B-, B) you should not be below 650. So you know 600 is a terrible score that is on the fringe of disaster. Do not waste time and effort trying to satisfy every candidate and never work at making a applicant fit your standards.

Eg: if your applicant meets the income standard but is below your minimum credit score immediately reject. Obviously you need to know why their score is low but that does not give you any reason to qualify them. If they have financial issues regardless of why, medical for example, they will still have problems paying rent.

You are operating a business not a charity, always keep that in th eforfront.

Rehan A. · Answer

I list a minimum credit score of 600. Before I started doing that, I would get lots of people asking what the credit score requirements were and also lots of applications with scores well below 600.

If you don't list a minimum credit score requirement and then use an applicant's credit score to disqualify them, you may be opening yourself to claims of discrimination, or at the very least a non-transparent selection process which applicants may find frustrating.

Rehan A. · Answer

Hey Maria. I'm a SFH investor in the Sacramento suburbs and do the same thing that you're proposing. I take quality pictures and ask that anyone who is interested in the house to first drive by the area and make sure the neighborhood fits their needs. Then, if they're interested in seeing the inside, they need to meet my requirements and fill out an application.

Anyone who applies and doesn't meet my requirements gets a short email letting them know that they didn't meet the requirements for the property. Everyone who did meet the requirements gets a date and time to show up and see the inside of the place. I usually schedule everyone for the same 90 minute window so that I don't have to wait around for no-shows and waste too much time.

To answer your questions:

1) No need to really sugarcoat this. I simply let people know that I have too many people interested in the property and I don't have time to show it repeatedly. There will be a showing for those who have filled out an application and meet all of the minimum selection criteria.

2) If someone doesn't qualify, let them know early so they don't waste their time waiting for you.

3) Yes, there is nothing illegal about discriminating against tenants who don't meet your minimum selection criteria as long as you consistently apply your requirements across all applicants. The entire point of screening is to discriminate against those who don't meet the requirements so that you can minimize future headaches and protect your investment.

For the tenant who already applied before you put up minimum requirements, I would probably refund their application fee and not show them the place. If someone before applying tells me something that I know would disqualify them from being selected to rent the place I usually encourage them not to waste their money on application fees.

Hope this helps!

Maria G. · Answer

@Thomas S.: I didn't know that grading, so thanks for teaching me.

It is definitely a class B, no less for sure. I don't mean to compromise my standards. I was just wondering if stating more than minimums is a good idea. My current tenants had 800 credit scores and could make 3x the rent. I discarded a candidate that made like 10x the rent and had very good scores.

I currently have an applicant that makes 3.6 times the rent, but her score, although zillow consideres it excellent (690 on Vantage 3.0), it doesn't sound so wonderful to me. But it is true that she's a homeowner and she's divorcing, so perhaps once she sells the house, her score will go up.

@Nathan G., @Rehan A.: OK, perhaps I should indeed list some minimum credit score. However, don't different systems (Vantage, FICO) work differently? Does a 690 mean the same for all?

Nathan Gesner · Answer

There's nothing wrong, illegal, or immoral about screening the tenant by phone.

Explain your basic standards, particularly anything that would automatically disqualify them like a pending bankruptcy, sex offenders, or lack of a Landlord reference. If they disqualify for any of those reasons, don't bother showing the house to them.

It's OK to tell them you have other interested parties but don't tell them you have a rocket scientist that makes 10x the income with a credit score of 810 that wants to pay five years rent in advance! That may be true, but you don't want to scare prospects away until you have someone locked in.

Maria G. · Answer

So I guess in sum: while I do know I don't want to show the unit to those who don't meet the minimum requirements, I would like to also not show it to those I know don't meet other requirements (that I don't want to list as min). For example, I chose not to post a minimum credit score because I know there are different measurements (FICO, Vantage...) and I want to defer that decision to later, when I am able to review their application on the whole. But once I do, I may have a pretty good idea of whether the applicant is good, and if he/she is not, I'd rather not waste time show them the unit, but I don't want to be accused of not giving them a chance (lawsuits, etc.).

Maria G. · Answer

@Rehan A.: Thanks a lot for your detailed explanations.

1) What if it is not the minimum requirements? I list "3x income, no evictions, clean background" as my minimum requirements. So for example, what if I get an application that gets a really low credit score?

2) OK, that makes me thing that in the initial "thanks for your interest" response, I should ask a comment about "please make sure you meet the minimum requirements before you go though this process."

The one person who sent me his application before I had the minimum requirements listed: I didn't take his money, but he did use the tool I told him that I use to screen applicants (rentscreener), so he and his buddy paid $40x2. They got really low scores from it (C and F), including low credit scores (both) and criminal record (one of them, sell/possess marihuana). Should I tell them already? Should I offer a reimbursement of the $80?

Thanks again!

Selecting candidates in stages, inform only at the very end?

Selecting candidates in stages, inform only at the very end?

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