There are basically three strategies available when filling a vacancy: scheduling an open house, setting a deadline for submission of applications, or processing applicants in the order they are received.
Because the first two options present logistical challenges that can prolong vacancies, landlords most often opt for the latter, and accept the first qualified renter. There is a perception that this is the fastest way to fill a vacancy, and that this strategy reduces the likelihood of a discrimination claim.
But there is a problem with this popular strategy. The first qualified renter may not be the most motivated applicant, and that actually can prolong a vacancy. Here’s an example:
Tenant A answers a classified rental ad. He has two small children. He claims adequate income, but is relocating for a new job. Tenant A is available to move in quickly. The landlord agrees to a tour, and at the completion of the visit, Tenant A asks if anyone else has applied for the rental. The landlord confirms that Tenant A is first in line. Tenant A leaves with a rental application and promises to have it completed later that day.
Three days pass before Tenant A responds to the landlord. Rather than submitting the application, the tenant explains that his wife found a different house, and they are debating which one to take. She likes the other one better, but would consider this landlord’s property if the rent were lower. The tenant offered the same proposition to the other property owner in an attempt to have the two landlords compete over the tenant. At no point did Tenant A submit a rental application or agree to a tenant background check.
Meanwhile, Tenant B answers the ad. Tenant B is married with no children, has two dogs, and also is starting a new job. The landlord explains that Tenant A has taken an application and is first in line. Tenant B asks to see the property anyway.
That’s the problem with committing to the first prospect in line. The landlord in this case is fearful that passing over the first tenant is discrimination because that tenant has children. Yet, if the landlord does nothing, the property sits vacant. What should the landlord do?
Perhaps the best formula for managing multiple applicants is to rent to the first qualified applicant who is actually motivated enough to move through the leasing process in a reasonable amount of time. But that requires setting limits.
In order to accept the first qualified applicant, it is necessary for a landlord to set out the parameters for screening multiple tenants. That includes the minimum qualifications, and a way of determining who is first — the first to call, first to tour, or the first to fill out an application.
From there, the landlord will need to apply that standard on a case-by-case basis. For instance, if the first tenant needs a little extra time to complete the application due to a disability or language barrier, then the landlord’s policy should accommodate that contingency. But if the first applicant hasn’t committed, like in the example above, the landlord has a right to move on to other prospects.
It’s helpful to have an effective tenant screening policy in place well in advance:
If the property is going on the market for the first time, make sure the rent is set just below maximum for the market. Too low and the landlord loses money. Too high, and the landlord attracts the worst rental applicants.
Always advertise that the applicant under consideration will be subject to a tenant background check. Include a warning at the top of the rental application confirming that the information in the application will be verified, and that supplying false or incomplete information is fraud.
Set out the minimum standards for qualifications. Be prepared to accept the first applicant who meets these minimum standards. Be careful that your standards are not unreasonable, or tailored such that it is easier for any particular demographic to meet the requirements.
Prequalify applicants over the phone before offering a tour.
Don’t make promises about holding a vacancy open. The fear of competition from other applicants creates a call to action that keeps the applicant motivated. However, if a particular applicant needs a little extra time but is demonstrating diligence, be reasonable.
After verifying the information in the rental application, run a tenant credit check and speak with the references before offering to lease.
Out of fairness to applicants, don’t run a credit check on a prospect unless the person is under serious consideration. Verify the information in the rental application first before running a tenant credit report.
At any point in this process, be upfront with other applicants. Create a waiting list until the lease is signed, but let those other applicants know where they stand. Never tell an applicant that a property is rented when it is not.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
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Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.
