What Landlords Should Know About References

by Chris on March 25, 2019

Previous landlord references are a staple of tenant screening. But are landlords taking advantage of this tool? One landlord says this:

“I’ve probably had 10 separate former tenants in my property in the past 10 years, including families and roommates. Two 20-somethings both moved out to buy places of their own. Most moved on to other rentals. In not one instance has anyone — future landlords, lenders — called me to check references on my past tenants. The two guys who bought places of their own were consistently late in their payments, for instance. And in a few cases, those tenants have moved yet again, so there have been perhaps 15 times in which a landlord or lender could have/should have contacted me. Not one has. Not a one.

I suppose it’s possible that tenants set up fake references. Or they asked their future landlord not to contact their current landlord (me). In some cases, they were great tenants. In two cases, they were horrible. But I wasn’t even contacted by the landlords for the great tenants.

I used to manage my own property, but now have a property manager do it. The property manager checks all references. However, those reference checks didn’t detect the two horrible tenants, and I wonder if it’s because (as with employment situations) the current or past landlord is afraid or unwilling to give a poor review. In one case, I had someone else besides the property manager follow up with a terrible tenant’s past landlord and got a positive review! The only moral I can draw is that if you get a terrible reference (which I never have), there may be some truth to it. If you get a good reference, it’s totally worthless.”

Another landlord has harsher words:

“I have rented to over three dozen tenants over the years and never had anyone call to check a reference on a former tenant. It’s scary how lazy and careless most landlords are.”

These comments suggest that the system might be broken. That would be a shame, because the best way for landlords to avoid income loss from bad tenants is to help one another.

Professional tenants continue to rip off multiple landlords. It’s no wonder landlords who have been victimized are angry that future landlords don’t bother learning the truth about a prospective tenant.

This skepticism over references is understandable, especially where previous landlords don’t tell the truth about a bad tenant, whether it’s out of fear of retribution, or the desire to get rid of the problem. But that skepticism shouldn’t prompt landlords to give up. If they do, the bad guys win.

It may be time to revisit your tenant screening policy with respect to previous landlord references. For instance, are you asking the right questions? Are you talking to the landlord or a phony reference? Are you talking about the same tenant? Are you asking for specific details such as late or skipped rent payments, property damage and disturbances, or soliciting a general opinion? Is the landlord being evasive? Is the tenant trying to avoid the scrutiny?

The reality is that the previous landlord reference is just one piece of the tenant screening puzzle. A good reference is not necessarily an indication of a good tenant, and current landlords should not stop there when vetting tenants. References must be evaluated in conjunction with other information from the tenant credit report, the rental application, and income verification documents. It’s the discrepancies that reveal the red flags.

Landlords who are reluctant to provide references needn’t be, so long as they stick to the facts. There is nothing defamatory about reporting a tenant who has caused damage beyond wear and tear, routinely paid late or skipped rent payments, or who has caused disturbances.

Because landlords already are at a disadvantage when it comes to evicting bad tenants and preventing income loss, it is important for landlords to stick together. The tenant database at Landlord Credit Bureau is a great way to do that. Reporting tenants to this database is an effective work-around to the tenant who is listing fake references. At the same time, it’s a place where landlords can report good tenants and give them a boost.

Another valuable tool for landlords is to Report Rent Payments to a credit bureau. That information is then stored by a third party and cannot be compromised by tenant fraud. Like the Landlord Credit Bureau, reporting rent payments for good tenants helps them build a strong rental history.

If you still are reluctant to call on previous landlord references, consider this: A tenant left a previous landlord with $50,000 in property damage. That same tenant ripped off the next landlord, too. If a 15-minute phone call with either of those landlords could save you $50,000, that’s like earning $3,335 a minute.

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).

Click Here to Receive Landlord Credit Reports.

Disclaimer: The information provided in this post is 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.

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