How do you handle multiple applications for one unit?

Question

I'm not sure of the proper procedures for processing (say that 3x's fast) applications. I received an app 5/30 and another today 6/3. The first applicant said she could have the hold fee 6/6. I still have to do my due diligence on the second.

The question is, if second applicant checks out do I need to give first applicant 'first right of refusal' or offer to the better of the two per my requirements or advise both they are approved and 'whoever submits the hold fee first gets the unit?

On paper the 2nd tenant appears to be the better choice based on credit history. 1st appears better on ability to pay. Both have been on their job for quite some time. My question is less about which to choice but more about the proper order of things.

Another question I just thought of... how do you handle applications when you have just one unit available? If you take an application and are currently reviewing, do you continue taking applications (not saying stop showings), thereby taking application/credit check fees? Or do you hold off on processing (or for those who have the applicant apply online, do you have them hold off until a decision is made on the current application)?

Bob H. · Answer

If I accept one tenant before running a screening report on a second tenant, I refund the second tenant's application fee. Also, if I look at an application and decide the tenant can't afford the rent or there is some other problem before I run the screening report, then I refund the application fee. There's no guarantee of first come, first served, and there's no guarantee that an application fee, once paid, will be refunded. I just try to pick the best tenant available within a reasonable time and charge others only when screening them costs me money.

Tonya Smith · Answer

Hi Arthur - I am a Broker and routinely represent landlords. I usually suggest to my clients that they advise a cutoff date and/or # of applications they will accept. This will give you time to complete your due diligence and make an informed decision. You only need to advise applicants that you are reviewing applications and when you anticipate making a decision. Hope that helps and good luck!Tonya Smith, Sheffield Realty Group

Tonya Smith · Answer

@Arthur Banks I am assuming you have not stipulated whether app fees were refundable or not. I believe it is a matter of preference as to how to accept apps. I have encountered LLs that process one app at a time and review them FIFO. This removes you from holding unnecessary fees; however, it can burden and delay your review process. Typically, I prefer apps with a processing fee and advise that it is refundable if another applicant was selected, you have secured the agreement and rec'd the security, if no expenses have been incurred. If the approved applicant does not provide the security by the agreed date, you can move on to the next app with fee in hand once you reconfirm they are still interested.

Steve Babiak · Answer

Most providers of credit reports will restrict you from providing the applicant with a copy of the report; instead, the adverse action letter you send should advise the applicant how they may obtain a free copy of the report. I used to say "all providers", but somebody on BP has identified a service and shown the agreement where this was allowed - so check the agreement with your service provider as to whether you are allowed to give a copy.

Steve Vaughan · Answer

I consider it a pain, yes @Steve Babiak. A proper rejection letter, in compliance with the fair credit reporting act, where if at all you pulled credit reports from, whether to list the reason for rejection at all if it wasn't credit related or require them to submit the request in writing within 60 days, etc. I have 3 standard letters I pick from depending on what the reason for rejection was. Forgive me if it's not my favorite thing to do. I just got a thumbs down!

Marcia Maynard · Answer

We do a tenant screening interview before showing and before taking an application and application fee. We accept multiple applications within a given time period. We review them and rank them according to our rental criteria, most qualified on top. We first verify rental history, employment/income, and contact personal references. Then we run the credit and legal reports (for which we pay a fee). We fully process only one application at a time. If they pass, then we offer to rent. If they are not prepared to go forward, we go on to the next applicant. I would not stop advertising but if I'm already processing an application, I will ask my tenant screening questions and add them to a wait list for a follow-up if the current applicant does not work out. The key is to be open and honest about your process with all prospective renters. If we do not use the application fee to run the credit and legal reports, then we return it. If we reject an applicant after fully processing their application, we send an Adverse Action Notice as required by our state law. The Adverse Action Notice indicates the general reason for the rejection.

Arthur Banks · Answer

Thanks again all. @Steve Babiakthanks for the articles. It seems like what I should've done is take the application, start processing but NOT run/have them run the credit report until needed. E.g. declined the applicant before them. I just had another applicant call to make arrangements to drop off their application. I'll take it, along with the app fee and hold it until I know whether I need to pull the report. Are many of you charging a processing fee on top of the cost of credit pulls?

Jason Churchill · Answer

Congrats. What a good problem to have...multiple good applicants. We've dealt with similar cases and just like everyone else has suggested, be clear and up front with the candidates. Keep showing until that fee is in hand. When there are tons of interested parties we allow a pre-lease option (pre-walk through). Those tenants tend to be proactive, super responsible, and score the best. If we get to the showing date and have two or more we run through the traps and make the best choice on paper. Tell me the truth and if they're worth renting to they'll understand the process is necessary. Best of luck!

Dawn Anastasi · Answer

I will keep showing places until I get a holding fee. I've tried to hold in the past without a holding fee and it's wound up not working. The person would just change their mind and I'd be out time.

Judith Caracheo · Answer

So so can you share what you're criteria are that you asked via email to potential applicants before showing the house.