Application Fees - Charge or Not?

Question

Do you all charge application fees? Refundable or non-refundable?

Taylor L. · Answer

For sure charge them as long as you're legally able to in your market. It's a great way to weed out non-serious applicants. A fee is non-refundable by definition. Look at what others in your market are doing and go off of that

Eric C Gunderson · Answer

@James Wachob Thanks.  I was told "this market" doesn't charge the fees and I called BS.  Wanted a little support from the group to make sure I wasn't crazy.

Aigo Pyles · Answer

@Eric C Gunderson

We have a non-refundable application fee for serious applicants. This is to cover the expenses for a thorough background check such as reviewing criminal records, pulling credit report, reviewing rental history, etc. The purpose of the fee is to screen applicants to ensure that the tenant/s are responsible. This is also to deter unqualified renters.

All the best!

Sharlene Mulchandani · Answer

@Eric C Gunderson Like most others have said, charging application fees helps you save time as only serious applicants will be willing to pay these fees upfront. Charging these fees also helps you reduce your costs and risks, since you're able to have them effectively screened, without having to foot the bill for every applicant that applies to your property. I suggest charging a non-refundable application fee between $30-$50. However, do check your state laws as well.

David Hutson · Answer

I'm with @Taylor L., if you don't charge a small amount you may receive more people kicking tires and wasting your time and money for the credit/background checks.  In Memphis, I only know of one PM who doesn't charge and all the others do.  If I'm renting out properties on my own I also charge.

Eric C Gunderson · Answer

@Nathan G. That's a red flag if they can't pay the app fee!  Thanks

Nathan Gesner · Answer

Yes, you should charge a fee. It covers the cost of a credit/criminal background, which is critical to your screening process. It also weeds out a lot of bad renters. You'll be amazed how many times I have someone tell me they'll be able to pay the $30 application fee when they get paid in a week or two!

Look around to see what property management companies are charging in your area and try to stay close to that.

Eric C Gunderson · Answer

@David Hutson Thanks for the feedback.  Much appreciated.

Eric C Gunderson · Answer

@Adam Martin thanks.  Good approach!

Adam Martin · Answer

While I don’t personally get any of the application fee I have the tenant apply on Zillow and each adult pays a $30 fee to them to run the check.  This way I don’t have to be responsible for the money and no one can say I took their application fee and didn’t consider them.  Keeps things simple and most applicants expect to pay a fee in my area so no one has complained.  People are also more honest up front because they don’t want to pay for a background check if they know they won’t meet your criteria.

Application Fees - Charge or Not?

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