Low vacancies and high rents can create the perfect environment for rental applicant scams. The tighter the market, the more desperate problem renters become. But landlords can stave off bad tenants by watching for some common red flags:
Targeting Small Landlords
Problem tenants are most likely to respond to ads in free online classifieds because most small landlords choose that option. Small landlords are perceived as naive and easier to manipulate than the more experienced landlords or property managers. In particular, small landlords are perceived as less likely to have a stringent tenant screening process. Landlords can overcome this disadvantage by:
Creating professional-looking ads;
Stating that a tenant background check is required;
Requiring a higher level of commitment from applicants by prequalifying individuals over the phone and then meeting face-to-face to verify identity prior to allowing a property tour.
Bait and Switch
Another common scam is the bait and switch, where the problem applicant gets someone more qualified to rent the unit. This is a difficult scam to detect:
Watch for the applicant who invites other people to the property tour for no apparent reason; and,
Pay attention to whether the applicant consults with another decision-maker.
In addition, ask the current landlord if the applicant lives alone, and require the applicant to list intended occupants on the rental application. It’s also a good idea to review policies regarding additional occupants and draw the connection that adding unauthorized occupants violates the tenancy agreement.
Pointing a finger at others often coincides with a failure to take responsibility. That’s a common trait of bad tenants. This characteristic is displayed by persistent excuses and complaints about others, including previous landlords.
A person can suffer bad circumstances without blaming that misfortune on other people. For instance, an applicant with bad credit due to something like a medical catastrophe simply needs to explain that to a prospective landlord. However, if that applicant then adds that the previous landlord was a jerk for not understanding those circumstances, there may be more to the story — like unpaid rent.
The applicant also may try to gain sympathy for tragic circumstances as a ruse to prevent a tenant background check. Watch out for the sob story. Applicants who have experienced problems may be perfectly suitable tenants, but scammers pretend in order to mask a troubled rental history.
When trying to distinguish the honest applicant from the scammer, take into account how forthcoming the person is with the information, and what he or she has done to try to rehabilitate. Then, verify all the information provided, just to be on the safe side.
While there is no way of knowing the statistical likelihood that a rental applicant is providing false information, the landlord who gets scammed is 100% at risk for income loss.
The most common lies on the rental applicant revolve around employment and income. Another common scam is misrepresenting the previous addresses and the length of residency at each. References listed may not be available or may be fake. Rarely, the entire application is false because it is based on an assumed or stolen identity. To avoid these problems:
Require a photo ID to verify identity;
Be wary of any applicant who leaves blank lines in the rental application, writes illegibly, or fails to sign;
Warn applicants that the information provided will be verified, and that you will consider any discrepancies to be fraud. The applicant should know there will be consequences; and,
Take the time to verify the information, even it it means holding the property vacant for a period of time. Place the onus on the applicant to prod references who are slow to respond.
A Sense of Urgency
As most landlords know, the common course of events for tenants who are relocating is to 1) find a new place, and 2) provide a month’s notice to the current landlord. Rental applicants who are breaking that tradition also may be breaking other rules, like not paying rent. The tenant in the midst of an eviction is likely to secure a new place before the dust settles on the current landlord dispute.
When an applicant is pressing for a quick turnaround, it may be because the person does not want to undergo a tenant background check. It’s common in this scam to pretend to be from out of town or extremely wealthy and able to afford anything. Some landlords describe applicants who have offered to pay cash on the spot, or to pay more than the advertised rent or deposit in order to speed things along. It may look like this applicant is trying to make a bargain when, in fact, they have nothing to offer — and nothing to lose.
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.