We listed for $1900, lots of interest; how do we get $2k?

68 Replies

This is for a SFH rental. We listed for $1900 and have many parties (6-7) trying to get it, with 2-3 very strongly trying to lock it down.


How do we propose a higher rent when we have multiple parties trying to "lock it down" without sounding misleading or scammy? Or should we just accept the most qualified tenant this time and eat the loss of rent potential?

Yeah, not sure how you pull that one off without looking bad.  You've advertised it for that price and people have applied for it at that price.  

I've mis-priced like that before (sometimes on purpose, sometimes not.)  I just console myself with the fact that it rented quickly and I have a great pool of tenants to choose from.  Often, I've found it's better to take a little less and have a great selection of long terms tenants.  Pick the best and move on.  

Originally posted by @John Chapman :

Yeah, not sure how you pull that one off without looking bad.  You've advertised it for that price and people have applied for it at that price.  

I've mis-priced like that before (sometimes on purpose, sometimes not.)  I just console myself with the fact that it rented quickly and I have a great pool of tenants to choose from.  Often, I've found it's better to take a little less and have a great selection of long terms tenants.  Pick the best and move on.  

That's fair. The $100/month isn't the biggest concern, but what criteria would you suggest I go off of in choosing a tenant? If I have 3 perfectly qualified tenants, with the required income, clean background checks, similar move-in dates, do I just arbitrarily choose the one whose application was submitted first? What's your thought on that?

Originally posted by @Mark Fries :

@Timothy Duggan

That sounds scammy to even have that thought because you should have priced it right to begin with....

We're being asked what they can do to lock it down, offering to sign a longer lease. It seems like an appropriate time to broach the subject, but maybe that's taboo? I don't know. This is all in the past 2 days. We're a bit new to this. I don't mean to sound scammy. 

 

@Account Closed , I'm always looking for the tenants who I think will stay the longest and not cause undue damage to the home.  I am also looking for people who are respectful (i.e. good chemistry on the phone, do what they say they're going to do, fully complete applications, etc.)  If they are complaining or asking for upgrades right off the bat, I generally don't want them.   In the end, it's somewhat of a crapshoot as people's circumstances can change on a dime.  If I really can't decide, then I usually just do first in. (They are usually the most enthusiastic anyway.)

@Account Closed

Congrats on all the leads. If you advertised it at $1,900 then you should not try to get the applicants to 'bid it up'.. that just isn't right.

As far as picking the tenants. If they are all exactly equally qualified then you should go with the person who applied soonest. I say this because you need to set a rule for yourself on how you split these kinds of decisions. In the future if you do not treat these situations the same then you may end up with a discrimination suit without even knowing it.

@Account Closed I'm in the "disagree" camp from the above posts. How is it any different that listing a house for sale on the MLS as $100k, and a bidding war develops, and it sells for over asking? There's not anything unethical about that and it happens all the time.

Originally posted by @Jon Reed :

@Timothy Duggan

Congrats on all the leads. If you advertised it at $1,900 then you should not try to get the applicants to 'bid it up'.. that just isn't right.

As far as picking the tenants. If they are all exactly equally qualified then you should go with the person who applied soonest. I say this because you need to set a rule for yourself on how you split these kinds of decisions. In the future if you do not treat these situations the same then you may end up with a discrimination suit without even knowing it.

That's what I'm worried about. I.e. we have an interested tenant with emotional support dogs, and another on government assistance housing, so I'm trying to be very careful to not let there be any interpretation of discrimination. If someone will pay more, that makes it easy. That's a very easy argument if I ever ended up in court. But otherwise, I imagine it is harder. Anyway, I'll do what you mentioned and hopefully never end up in court!

Yes, if you have already accepted applications for the property for review, you shouldn't change the rental price. One way to get the additional $100 would be to have the tenant take on cost of water, sewage or garbage utilities. If these costs are already the tenant's responsibility, then consider doing a six month lease (if your state laws permit that) and increase rent after that with a renewal. 

For a tiebreaker in choosing a tenant, I would review each applicants' debt to income ratio and go with the lowest one. However, if all three applicants are equally qualified by similar credit scores, income amount and landlord references then you should go with the first come first qualified. 

Good luck!

Originally posted by @Tom S. :

@Timothy Duggan I'm in the "disagree" camp from the above posts. How is it any different that listing a house for sale on the MLS as $100k, and a bidding war develops, and it sells for over asking? There's not anything unethical about that and it happens all the time.

That's how I felt. It doesn't seem dishonest to me. It seems like a market. Thanks for the message.

 

@Timothy Duggan if all our criteria are met by multiple applicants then we go with who applied first and can provide the deposit and rent first.

@Timothy Duggan

It wouldn’t look good to try for 2k now, but you could do a short lease and raise rent at the end.

The only real way to go up at this point is to "pull it of market" for a couple of weeks and re-list and start from scratch..... is that really worth it? Probably not....

You are probably priced about right.... you want 3-4 good candidates to choose from....

Too low and you get TONS of applicant and most of them suck....

Too high and you get only a few or none and you jump at less than ideal candidates because you feel desperate to take what you can.. not a good idea...

So you want 3-4 good..... options. If they are all pretty equal, then you go to the smaller things..... how long they have been at job, is the job close to home or big commute, history of being a long tenant, and your gut feeling when you met and talk to them...

If they are all truly equal, first come first serve....

I will caution one thing.... the more "desperate" they are of PICK ME.... PICK ME.....PICK ME !!!..... multiple emails or phone calls every day for questions or updates etc etc.... the more I back off picking them....overzealous applicants often become overzealous tenants...

@Timothy Duggan I’d be so mad as a tenant that u ran my credit on a price agreed on and then increase it to 2000$, people lost points to do credit check

Scammy as hell

Don’t count your chickens before the eggs hatch :)

Even with a lot of interested prospects if you have good tight screening one or two might actually be a good candidates or none.

I would just take them first come first serve and screen them and rent to the first qualified prospect.

Unless you have rent control nothing is stopping you from asking for more than what it was listed for. Personally I wouldn’t after advertising it unless I really goofed on the rent valuation.

A lot of prospects doesn’t mean it justifies more rent though. I’ve had people fill out applications with fees knowing they did not qualify for the rental.

My biggest concern might be fair housing laws. Legally you have to rent to the first applicant that qualifies and meets your criteria so don’t do anything that could allow someone to accuse you of discrimination.

Originally posted by @Mario Am :

@Timothy Duggan I’d be so mad as a tenant that u ran my credit on a price agreed on and then increase it to 2000$, people lost points to do credit check

Scammy as hell

That’s totally fair. We have not had anyone submit an application yet, so no credit checks done yet.   this is all happening fast. We have 7+ applicants. 3 want to know what they can do to lock it down so nobody else can get it.

But you make a good point. Thanks

Going to multiple, qualified applicants and telling them that the price is actually going to $100 more than the original rent they applied for doesn't seem to be the best way to start out.  I am new at this too, but I think that sends a message to the renter that discourages them from staying long term.  "You are a very qualified applicant, and that is going to cost you another $100 Pal.."  Just doesn't sit well... Good luck!

Get a great tenant and let hem know that you have priced the unit below market value and will be raising rent to market at the end of their term. So if you do a year lease, let them know that you’re hoping to build a long term relationship and look at the first year “discount” in rent as your part in doing that in good faith.

Originally posted by @Tom S. :

@Account Closed I'm in the "disagree" camp from the above posts. How is it any different that listing a house for sale on the MLS as $100k, and a bidding war develops, and it sells for over asking? There's not anything unethical about that and it happens all the time.

The difference being that when you sell the house, you simply walk away when it's done and never look back.  With renting you will continue to deal with these people on a daily basis until they decide to move out.  If your tenant feels like you are slimy from the get go, then any other action that you do will also be perceived as slimy.  Additionally with renting, you charged them a fee to run their credit and background check which makes it seem like a bait and switch when you hook them in with a good price, and then later completely change the price on them after they have committed themselves to this property.  With selling a house the buyer isn't required to pony up any money until AFTER the deal has been made.

Having 3-4 qualified candidates isn't a bad thing, if you had 10-20 highly qualified candidates then I would say you had a pricing problem.

Rent it to one of them for the price you said in the ad.  Next time you will know to ask for more.  See who completes the application first and who viewed it first if they are all truly equal.  Chances are they are not all equal-pick the ones who you think will take the best care of the house and stay the longest.

If you bump it to $2k you could go from 3 to 0 real quick. Having multiple qualified is a good thing, having dozens is bad. I would also wait until you see credit scores before you go counting your chickens with that "qualified" part. People eager to lock it down could just be quick to get you to say yes then sue for discrimination when you say no after. Tell them all "I am sorry but there is nothing that will get me to commit to anyone until I go through all of the applications". There is NO SUCH THING as "equally" qualified, it is about as possible as the lottery number being the same back to back. There are so many factors to look at to have multiple people with the same scores isn't going to happen. They could make the exact same money, have the exact same employment history and exact same debt to income ratio and one could have a 720 FICO and one could have a 730. Once you get actual applications with precise information then you will see who your clear winner is 

Originally posted by @Timothy Duggan:
Originally posted by @Mario Am:

@Timothy Duggan I’d be so mad as a tenant that u ran my credit on a price agreed on and then increase it to 2000$, people lost points to do credit check

Scammy as hell

That’s totally fair. We have not had anyone submit an application yet, so no credit checks done yet.   this is all happening fast. We have 7+ applicants. 3 want to know what they can do to lock it down so nobody else can get it.

But you make a good point. Thanks

What can they do to lock it down? Pay the application fee, submit it, and ensure any references you'll contact will respond promptly. Then be ready to sign the lease and turn in the deposit + first month's rent. I tell everyone there is a process that has to be gone through, so the best thing they can do is get that ball rolling by submitting the application asap.

You'll get this a TON - most applicants will say how much they love the property, how can they move in asap, etc etc. Out of those only a handful will actually turn in an application, fewer will actually qualify, and even less will actually bring the funds and sign the lease.

$1900 might be the hot-spot. I've had rentals go from totally dead to non-stop showings over just $50 at certain price points. Generally its better to have MANY applications to chose from vs. only 3 people who've applied in a month. If you are confident that $2k is market rate for your unit, take the listing down for a couple days and relist it at $2k. But be careful - if you're wrong you'll potentially lose out on another month of rent ($1900) and only gain $1200/yr.

@Timothy Duggan from a management company perspective if I have three people applying for the same place and they all meet my qualifications for renting I follow the “first applied” method. Basically who put down the app and/or deposit first. This allows managers of rental properties to stay in accordance with fair housing regardless of portfolio size. If the first applied person declines to rent then I move to the second person and so on. It may be an arbitrary method but it helps me stay fair.

@Timothy Duggan

Just lock it in and put them on a 6 month lease. Raise it at renewal. Even if they decide to move you can fill it quicker in the warmer months.

Price alone accounts for a lot but it can also be the location and condition/layout of your unit that may net a higher amount of applicants

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