Why are we landlords afraid to make tough decisions when it comes to screening prospective tenants? Have you noticed that some potential applicants become pushy or demand sympathy? Haven’t we all heard the same excuse from applicants, “the information you’re asking for is buried somewhere in a moving box”?
At this point, do we choose not to require that they complete the corresponding field on the application?
Have you found yourself approving applicants who don’t quite meet your screening criteria because you’re afraid to keep the property vacant or simply afraid to say no? I’m sure you’ve also heard horror stories of Fair Housing investigations resulting in hefty fines for our peers. How about those “professional” tenants; those who lie on their applications and appeal to our emotions; the scammers who know how to outstay their welcome?
Being a landlord comes with all kinds of risks; however, as long as we’re just good at our jobs as landlords then there is no need to be afraid to screen applications. Making decisions based on informed policy reduces the potential for costly mistakes.
Knowledge is Power
First, knowledge is our power. Know the laws that govern our industry. Consult with other landlords, educate yourself, take advantage of educational workshops offered by landlord organizations and read a law book. The laws can change as often as every two years so be prepared to continue your research. Just when you’ve attended all of the landlord workshops offered by [AOA], it should be time to start taking them all over again. Don’t consider repeat workshops as refreshers because they will most like have brand new content and hopefully be taught by a different instructor who can shed their own light on policies and procedures that may be new to you.
Applications and Screening Criteria
Second, know your application and screening criteria by heart. One of the first interactions that you will have with prospective tenants will concern these two items. Wavering or uncertainty on your part will expose any lack of confidence you may have in your business. A landlord who doesn’t know how to answer questions about the application or screening criteria potentially opens the door to all sorts of risk.
If a prospective tenant sees that rules are flexible, he or she sees an opportunity. Stick to your criteria and keep your answers consistent and factual. Giving the tenant more time to provide required documentation is OK; however, lowering our standards is double trouble.
Application Fee
Third, make sure that your applicant standards are fair, yet rigid and charge an application fee. Don’t forget that you’re running a business. Application fees cannot be a profit-making endeavor; they are there to simply cover your actual costs. Your time is valuable, reports are costly and you want to ensure that the applicant is serious about renting from you.
Collect an application fee per applicant – paid in cash. When you charge an application fee of any amount, make sure that your screening criteria is in writing, given application receipts and issue written application denials when applicable.
Fair Housing
Fourth, know your Fair Housing laws. Specifically, screen someone with a disability as you would any other potential resident. Don’t become fearful if you hear that a prospect has an aid animal. You may verify the prescription for the animal, otherwise, treat the animal as a wheelchair – it goes with the person. Having a proven standard for application criteria protects you from Fair Housing accusations.
Treat everyone as an individual no matter his or her status. Rental history should not come from friends or relatives. Chances are, those persons will tell you that their relative is the best renter ever to get them out of their house into yours.
Absolutely require at least one government-issued photo ID. The list of acceptable IDs is lengthy and some of t hose are listed at http://www.tsa.gov/traveler-information/acceptable-ids. Note the address on the photo ID and match it to the current address listed on the application. If they don’t match, ask for an explanation. Obtain all signatures required in order to verify information with employers and credit bureaus. Don’t chase down the applicants for this information as it will hold up completion of the screening process in a timely manner. Make sure to document the date and time that the completed application was received to avoid Fair Housing allegations of picking-and-choosing based on personal biases. If the prospects comment unfavorably on the rigidity of your screening criteria, tell them that they can thank those who came before them who forced tighter restrictions to become a necessary business precaution.
Legal Discrimination
Finally, don’t hesitate to discriminate against those facts that remain unprotected by the law. Income amount, criminal history, rental history and the manner in which they treat you can all be grounds for denial. Note the attitude with which they approach the application, look for inconsistencies in their information and don’t be afraid to ask for more information or further explanation if you see red flags.
If prospects are vulgar or blatantly rude, ask yourself if you can do business with them. If prospects attempt to rush the process or become pushy, it’s likely because they HAVE to move to avoid an eviction from their current landlord. Don’t be afraid to change your screening criteria as your business evolves and you’re presented with different challenges. Make sure that you keep a dated copy of historical criteria and be consistent with the new rules to avoid Fair Housing allegations. Tell yourself, “From this day forward, I require…”, and then all that apply must meet the amended criteria from that point on. Again, treat everyone individually, fairly, respectfully and consistently and you won’t have anything to worry about.
Concluding Comments – Rejection Notices
My goal here is to convince you to not allow bad landlords or “professional” tenants to scare you away from one of the most important tasks of our business; screening. Do not be afraid to deny those applicants who simply do not meet your criteria. We have standards set in place for a reason – to protect some of our most important investments. Have Application Denial forms as part of your forms inventory. [AOA’s Tenant Rejection Notice]. Be brief with explanations when the applicant inquires, because the will, and stick to the facts. Chances are, your denial will not come as a surprise to them. It’s never too late, until you’ve handed over the keys.
Katie Poole-Hussa is a licensed Property Manager, Continuing Education Provider and principal at Smart Property Management in Portland, OR. Reprinted with permission of Metro, The Landlord Times.