Is it wrong to accept 20-25 applications with the fees?

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Is it wrong to accept 20-25 applications with the fees?

Cameron Riley
Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes

Hi guys! how many applicants per unit?

Sometimes I’m getting 20-25 people paying and filling out applications with the fees, how about you?

When does In become unethical?

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
5y

If you are getting that many applications....raise the rent

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  • Adam Martin
    Rental Property Investor · Member since 2020 · 1k+ posts · 1k+ votes
    5y

    I’d say that seems like an excessive amount.  I take several and select the most qualified but at most I have had 7-8 and several of the earlier ones had already been rejected.  Are you keeping the fees or do they go directly to a screening company like cozy or Zillow.  Especially if you are profiting on it I see it as somewhat suspect.  Do people know your qualifications up front or are you allowing anyone to apply and then letting them know they didn’t get it.  I do see that as unethical if they don’t know your criteria up front and they had no chance.  On a side note though that is a lot of interest which is good but makes me think there is room to up the rates some when you list as you may be getting a lot of interest since you are under market.  

    9Reply
  • Bob Okenwa
    Real Estate Agent/Investor · Peoria, AZ · Member since 2016 · 2k+ posts · 2k+ votes
    5y

    How are the applications coming in? In bunches or trickling in? If they all come on the same day, you may want to change the ad to pending or something. I'd guess that after 5 to 10 applicants, you'll find someone that fits your criteria. If not, keep searching and taking applications.

    If you're truly concerned about ethics, return the application fees to those who are at the back of the line and have no real shot at renting the property.

    16Reply
  • Account Closed
    Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes
    5y

    Honestly to me, its unethical if I keep the app fees but don't run the applications.

    My strategy is old school, but what I do is accept paper applications without payment at first, pick the most qualified one, do my "free due diligence" (looking them up on facebook, court records, etc)...     Once I get one that looks like they will qualify, THEN they have to pay the transunion background check directly to transunion, and if that checks out, then I call their references and go through the more time-consuming steps. 

    It feels more fair and also just keeps the drama down.   Applicants seem to accept defeat a lot easier when there was no money involved.      Plus in my demographic, its really easy to weed out the obviously sketchy ones early. 

    I also do not accept applications until we meet and they view the unit, and I will accept applications until I get someone qualified.  

    35Reply
  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y

    @Adam Martin

    My

    Qualifications are simple

    No violent felonies

    Good landlord references

    And must have a section 8 voucher

    7Reply
  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y

    @Bob Okenwa

    We do a 4 hour showing window

    All same day!!

    1Reply
  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y

    @Nicky Reader

    Seems like you NEVER charge app fees

    0Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    5y

    I provide all our criteria up front. If I receive an application and they qualify I accept them. ie, I process them in order received. The most applications I ever received on a property was 4. And actually none of them met the published criteria. I don't collect a fee, they pay the screening company directly. I don't understand why someone would have 20 applications. There's something wrong with the process.

    4Reply
  • Account Closed
    Investor · Columbus, OH · Member since 2017 · 861 posts · 1k+ votes
    5y
    Originally posted by @Cameron Riley:

    @Nicky Reader

    Seems like you NEVER charge app fees

    Yeah I don't need to nickle and dime people, I just want a good tenant and minimal drama. They do pay the background/credit check directly to TU.

    12Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    5y

    If you are getting that many applications....raise the rent

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    WebsiteView Page
    50Reply
  • Don Blake
    Investor · Washington, NJ · Member since 2015 · 20 posts · 7 votes
    5y

    Application fee with every application can even be considered taxable income, and as suggested earlier, bordering near unethical. Unless you charging time to review application, cost is really incurred when doing background and credit check. I'd think it's more reasonable to have a screening process to review initial application, and if applicant satisfies initial criteria, then they will incur charge for background and credit check. Just the same, be careful of "karma".....

    0Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    5y

    As long as people know they will be competing against other applications when they apply I see nothing wrong with it. 

    2Reply
  • Jaquetta T Ragland
    Real Estate Agent · Winston Salem, NC · Member since 2014 · 486 posts · 303 votes
    5y

    @Cameron Riley can you accept the application fees in batches so you’re not accepting everyone’s application fees at once?

    0Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y

    You asked when it becomes unethical-if you are keeping all of those fees from those who you haven't screened because you found a tenant-you're past that point.  When they hand in an application, do a quick scan of the form to see if they meet your criteria, if they don't, simply tell them that and don't accept their money.

    4Reply
  • Jon KellyPro Member
    Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
    5y

    @Cameron Riley 20-25 applications with fees is excessive. If most of these applicants are qualified, then increase your rent. 

    I would make sure you tell the applicants how many other applications you received. I would also return the app fees for any applicants you don't screen. For example, if you decide to rent to applicant #6, only keep the fees for the first 6 applicants. 

    On your journey towards being a real estate mogul, these $25 application fees are peanuts. Do the right thing and return the fees for any applicants you did not seriously consider. 

    7Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    5y

    @Cameron Riley we charge $35 for BG and app. If the 1st person qualifies thats it we stop. Why are you taking 25 apps???? 

    2Reply
  • Chad Adams
    Member since 2020 · 1 post · 0 votes
    5y

    @Cameron Riley

    I do a four hour open house and if they are interested they pay the application fee. I answer all the questions upfront and tell them what is expected and what the process is. This honestly cuts a lot of people out because of criminal history, rental history and major credit issues so they don’t apply.

    0Reply
  • Nigel Guisinger
    Rental Property Investor · Member since 2019 · 93 posts · 110 votes
    5y

    Run the first one if they pass your qualification, refund the others. Put them in order of who returned the full application with app fee in chronological order. The last thing anyone should do is to be shady and keep unnecessary fees. That gives good landlords a bad name. 

    2Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y

    I don't know any landlord who actually does full screening that makes money from applications. All my application fee goes towards the credit and background check. On top of that I have time verifying references and employment, so each applicant costs me more than I get. I view applications like acquiring customers in any other business - there is a cost. For that reason I do pre-screening and I accept first qualified applicant. I rarely get more than two applicants, just because of my process.

    Since you are asking if it is unethical, it leads me to believe you are collecting money and not even screening people. Maybe you look through the stack and pick a good one. I am not sure what your process is, but if you are not screening people, you should not be charging people. If someone has no chance of getting approved, don't take their money. Section 8 people are on a fixed income, so you are taking from the poorest people during a pandemic.

    8Reply
  • Jeffery Gibbs
    Investor · Winston Salem, NC · Member since 2018 · 9 posts · 7 votes
    5y

    @Cameron Riley’s I do a free prescreening. I just put the “make or break” questions. If they meet criteria I send them to Cozy and they pay for the background and credit check. I may take 20 applications but I start with the best and only do one at a time. If their info checks out, I’m done. If not I do the next best one. Usually only takes one or two.

    1Reply
  • Nate Bell
    Member since 2018 · 150 posts · 140 votes
    5y

    @Cameron Riley

    It sounds like people have access to an online application without you sending it to them. I meet with folks, show them the unit, talk about the rules, ask about their lives, and then send them a link to the application. After I get about 3 in process, I start telling new prospects that I have applications in already and I’ll put them on a list in case they all fall through.

    There would never be a scenario where I’d receive 25 applications.

    3Reply
  • Jake Drappi
    New to Real Estate · Brick, NJ · Member since 2020 · 115 posts · 39 votes
    5y

    @Cameron Riley learned this in business. If you have to ask, then you already know the answer.

    2Reply
  • Jason C.
    Investor · Austin, TX · Member since 2014 · 217 posts · 170 votes
    5y

    @Cameron Riley

    If you think it “may be unethical” you are usually right.

    I take them via CashApp now so it’s super easy to refund anything I get on apps that I never seriously considered.

    1Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    5y

    Simple answer: yes, it's unethical. If you don't have a pre-screening process already in place to weed out people who have no shot then you are simply using the application process as a revenue generator. I would consider that unethical if not downright illegal. We pre-screen for free and then Transunion (or, lately Zillow) collect fees for the credit/background checks. The application is not the point to us, the successful tenant is. If I had that many paid applicants I would seriously revisit my screening process or my rent levels. 

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    4Reply
  • Henry Lazerow
    Real Estate Agent · Chicago, IL · Member since 2017 · 2k+ posts · 2k+ votes
    5y

    We usually have an accepted application in the first 2-3 applications but are in A-B areas. You should let people know the rough guidelines before you even show the property. For example say 3x income, etc. It saves you time showing it and yes if you are showing to knowingly unqualified applicants and charging fees it's unethical.

    0Reply
  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y
    Originally posted by @Michael Noto:

    As long as people know they will be competing against other applications when they apply I see nothing wrong with it. 

    Heres my process, let me know any updated thoughts you have.. 

    - I have a HOT rental market, many people looking for houses.

    - I do a 2-4 hour appointment window and have everyone that is interested come in that window, I accept the applications and 25.00 dollar fee. I send it to a third party to review ( third party person who works in a property management office ) she reviews the entire batch of applicants and sends back which one is the best fit for the unit. 

    So, should I cut it off at 10-12 applicants? Maybe say to prospective renters " We have a set limit of 12 applications per unit " 

    0Reply
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