Screening Tenants - Waiting to Accept/Deny

20 Replies

Hey everyone,

I'm renting my first property and have been studying Brandon's book on rental management. I have most of my paperwork and process in place.

My question: 

Is it okay to collect and run applications, and then wait on accepting or denying until I feel I have the best prospect?  How do you all handle this?  I am expecting those that apply to be following up shortly thereafter to get an answer.  Would like to know the best ethics as well as responding to these followup inquiries. 

Thanks!

If you're charging the applicant an application fee then I don't think it's intellectually honest to "fee and hold."  I generally interview a lot of candidates and I verbally decline/weed out those who just on the surface would not qualify (smoker, guy with 15 snakes, person trying to re-negotiate the rent down, someone asking me if an eviction will be a problem or if I plan on calling their last landlord, or asking about a payment grace period). By sharing what the qualifying criteria is beforehand, others can self-select out and you should be able to actually go to the application phase with one or two candidates.  Do the work upfront and avoid the needless collection of applications. 

Originally posted by @Patricia Steiner:

If you're charging the applicant an application fee then I don't think it's intellectually honest to "fee and hold."  I generally interview a lot of candidates and I verbally decline/weed out those who just on the surface would not qualify (smoker, guy with 15 snakes, person trying to re-negotiate the rent down, someone asking me if an eviction will be a problem or if I plan on calling their last landlord, or asking about a payment grace period). By sharing what the qualifying criteria is beforehand, others can self-select out and you should be able to actually go to the application phase with one or two candidates.  Do the work upfront and avoid the needless collection of applications. 

Great reply thanks for taking the time Patricia! 

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In my experience, great candidates dont wait around because they get accepted quickly elsewhere.

The only time I wait if when I have several people lined up to see the same day and i let people know they have the rest of the day to get me the completed application. 

Once I get a qualified application, I accept them. WE have set parameters on what is acceptable. 

Thank you Christine.  My question is more based around someone that may not meet my credit score requirements, but everything else looks pretty good.  That is the type of prospect I may want to wait on approving or denying.  To see if someone else submits an application that has everything in line.

To steer clear of fair housing/discrimination violations, qualify all applicants in the order you receive their complete applications. Have your qualification criteria set before you accept your first application, and measure every single candidate against that criteria. First one who meets it is the approved applicant.

For example, if your minimum credit score is 700, minimum monthly income is 3x monthly rent, and you require no evictions in the past 7 years, and you get applicant 1 who applied ahead of applicant 2, applicant 1's credit score is 705, income is 3.5x the rent, and has no evictions, then applicant 2 has a credit score of 775 and income is 6x monthly rent, and has no evictions - you still approve applicant 1 and let applicant 2 know they are next in line if applicant 1 backs out. This is simplified criteria, of course, but you get the idea. 

Let's say you do that, and then you only get applicants who meet most of your criteria except the credit score... nobody is hitting 700. You can wait it out, or you can lower your credit score criteria (maybe you set it unrealistically high, the property is in a low-income neighborhood) and re-evaluate everyone (again, in the same order), reach out to the candidates you rejected and ask them if they are still interested. Alternatively, instead of lowering credit score criteria you can give them an opportunity to apply with a co-signer - but again, you have to apply whatever your rule is to everyone equally.

@Nick Peraino Do you have minimum qualifications you are passing along to each perspective tenant before they apply? If so, if they do not meet the minimum qualifications then I don't think you owe them a response before you are ready to give them one. 

If you aren't outlining minimum qualifications before hand and people are spending money on an application under the premise you do not have any then I kind of think you owe it to them to get back to them ASAP so they can move on and find another place. 

Michael and Anna thanks for the input.  Yes I quickly changed my approach and have been sending every interested party a questionnaire to fill out, along with my qualifications standards... before even scheduling a viewing.  That has already proved to reduce a lot of further inquiry.  Most, almost all, of the prospects don't even respond to the questionnaire.  Which tells me they either aren't truly interested anyway, or, they know they won't qualify.

I had a couple come by yesterday that seemed almost desperate, and were clearly lying to me, one would say something about the questionnaire, and the other would "correct" them.  This is an.... interesting business we're all in haha.

Do you all find that 49 out of 50 inquiries go away right when you send them your qualification standards?  Is this normal?

Nick, we do a very brief pre-screening questionnaire. It’s basically like, are you a current renter? Do you have pets? Have you ever been evicted? Is your monthly income at least 3x the advertised monthly rent rate?

They do need to answer these questions to schedule a showing. This isn’t an application and they don’t pay a fee at that stage. After they have viewed the property, if they choose to apply we require a separate application for each member of the household over 18. Each application has a non refundable fee and we make it clear we will run background checks, so only serious applicants tend to go through with it at that stage. 

I hope this helps!

Thanks Anna and do you find that MOST of the inquiries are tire kickers or folks that know they won't qualify once they read the questionnaire?  I've had probably 80 inquiries and only 1 questionnaire returned. 

Be respectful to people's time, if you know that you're not going to accept someone then let them know quickly. If you have someone that's borderline, then its fair to take some time to make a decision and you would just run the risk that they do find another place as well. 

Fairly often, good candidates, who I would accept, often find another place or change their mind so I move pretty quickly when processing their applications and will even let them know they're my top pick as long as everything goes well with their application.

How do you all accept your rental application fees?  As of now I plan on having them go to the bank and make a deposit in my business account.  Any reason NOT to use Venmo for this?

@Nick Peraino I'm having the same issue - once given the list of qualification standards 99% of them vanish. In fact of quite a lot of initial contacts I've only gotten one as far as submitting an application. The husband's credit is terrible and the wife's is good so I'm still reviewing.

As far as fees, I'm using Cozy so the applicants pay their fee direct to them and they send me the resulting reports. I prefer not handling the money since Colorado just made new laws about that.

I don’t accept application fees.  I do as much due diligence as I can up front based on the application data, my instincts, etc. They acknowledge receipt of qualifying requirements which is a laundry list of items. When I find the best tenant potential, I speak with them about going thru the credit and background checks.  They pay the service provider directly. 

Originally posted by @Nick Peraino:

Thanks Anna and do you find that MOST of the inquiries are tire kickers or folks that know they won't qualify once they read the questionnaire?  I've had probably 80 inquiries and only 1 questionnaire returned. 

 Nick, the questionnaire is presented to anyone who clicks to schedule a showing, so if they know they won't qualify once they read the questionnaire, many of them simply don't continue from that point on. But our questionnaire is so brief and simple, of course we still get people who fill out the 5 questions, schedule a showing - we do go over our formal qualifications at the showing as well. Even despite that, we still get plenty of applicants who have a recent eviction or some other disqualifying factor.

If you're not charging an application fee then it's more than fine to hold out on your decision. I personally don't wait, especially if the person is a great candidate, because I'd like to have them renting my property. 

Thanks for the input everyone.  The qualification questionnaire was the missing ingredient.  I have setup email auto responders with my questionnaire so any emails I get from Zillow, immediately receive the questionnaire.  This is saving me a lot of time.  Most of them don't come back.  The ones that have have looked pretty good have led to showings.  I have 2 applications in that seem promising at this point.  

Having the questionnaire step in place is crucial and eliminates the need to WAIT on a decision.

@Nick Peraino Hey Nick, what we do is pre-interview the tenants during the showing and get a feel for if we are going to go with them or not. 

After you think that you are ok with the prescreening process, then you can go on to the application process and start running credit and background checks. 

No need to ding someone's credit with a hard inquiry if you aren't sure about taking the person on as a tenant.

@Nick Peraino. Be aware that many will self-disqualify after viewing your qualification. The ratio between interest inquiries and completed questionnaire will be big. Many will self-disqualify which is good for you - less due diligence on your end