Qualified applicant wants to know reason for rejection

Qualified applicant wants to know reason for rejection

Investor · Atlanta, GA · Member since 2016 · 37 posts · 17 votes

Hello! This is my first Bigger Pockets post. We had a qualified renter apply to rent our home, and she emailed asking why we rejected her. She's surprised that she's having such a difficult time finding a place to rent when she and her family are, by all measures, ideal candidates. I wanted to respond in a helpful and kind way, but I also wanted to ensure that I didn't say anything that could lead to my being accused of being discriminatory (or any other accusation). 

I'd appreciate feedback from my fellow BPers. Thank you! The letter is below

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Dear Prospective Tenant,

It really was a matter that we "lucked out" with an extremely qualified applicant. My guess is that there are very few like the ones that applied for our house. Because we had strong applicants (including you), I actually consulted with a couple of outside landlords to give a neutral opinion. I talked about our top three picks (Applicants A, B and C) and gave information without revealing personal details. The choice was unanimous.

The applicant not only had glowing personal references (a must, of course) they had:
• Credit scores over 800
• Guaranteed income from a solvent state pension
• Significant savings in their personal accounts

The "tipping point" seemed to be the guaranteed income. This is virtually impossible to find in a renter, and eliminates the prospect of evicting someone due to an inability to pay rent. The applicants we chose, like you, offered to pay rent before their actual move-in date to secure the property. They, like you, were looking for a long-term rental. They, like you, had adequate income for rent.

Times have really changed... this is not how it was five years ago when we first rented out the house, where no applicant had guaranteed income, let alone savings. I think it's a matter of lack of inventory. There are only about a dozen homes for rent in our zip code.

I am very surprised that we had choices from such wonderful applicants.

As far as how you appear on paper, you and your family would make ideal renters. I'm just as surprised as you are that you're having such difficulty. 

All the best,

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Roy N.Pro Member
Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
10y

Or ... more succinctly:

We received a stronger application.

Seriously ... TMI above, you do not need to assuage the applicant's psyche or yours.

See this reply in the discussion

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  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    10y

    Or ... more succinctly:

    We received a stronger application.

    Seriously ... TMI above, you do not need to assuage the applicant's psyche or yours.

  • Fort Collins, CO · Member since 2014 · 397 posts · 161 votes
    10y

    @Elizabeth V. did you run a background/credit check on the rejected applicant?  If so, be sure to send an Adverse Action letter:

    https://www.ftc.gov/tips-advice/business-center/gu...

  • Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    10y

    I only run one applicant even if I have multiple apps. If the first one is accepted, I return the app fee. If they question why, I simply state they were NOT denied and that a prior application had been accepted.

  • Vancouver, WA · Member since 2016 · 230 posts · 161 votes
    10y

    I like @Roy N. response, but in many locations these days you have to process applications in order they are received.  Stating you received a stronger application in one of these areas basically states you are breaking the law.  I think Seattle just did that.

    Best to send them your qualifications and just say they didn't meet them.  Not sure you have to say which one in particular.

  • Penny ClarkPro Member
    Sacramento, CA · Member since 2014 · 513 posts · 319 votes
    10y

    @Elizabeth V., Welcome to BP! To avoid this dilemma in the future, I'd provide written rental criteria with each application that covers credit, income and rental requirements that are Fair Housing approved. Then if applicants ask you about the requirements and application process, hand out the criteria. I would adopt the policy to go with first arrive, first qualified, or do one at a time. Do not accept any incomplete applications. If you run credit checks on an applicant who was approved but didn't get the vacancy, offer to give them a refund and say another candidate was selected because they provided all required verification including secured funds.  As soon as you've chosen your applicant, let the others know so they can cross you off their list. I only send out adverse action letters to those applicants I reject based on not meeting certain set criteria (credit score too low, etc.). As a courtesy I send them a copy of the credit report.

    You do not need to send such a detailed letter on why an approved applicant did not get the unit or discuss why another applicant did. Stating how the chosen applicant had a state pension and the others did not could be viewed as discriminatory since you cannot discriminate against someone because of their source of income. Screening one applicant at a time and following set criteria is the best way to go and will help you avoid legal hot water. 

  • Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    10y

    "lucked out " has no business in a professional letter.  

  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    10y
    Originally posted by @Jason Hartley:

    I like @Roy N. response, but in many locations these days you have to process applications in order they are received.  Stating you received a stronger application in one of these areas basically states you are breaking the law.  I think Seattle just did that.

    Best to send them your qualifications and just say they didn't meet them.  Not sure you have to say which one in particular.

     Jason:

    Then simple state:  An application received prior to yours was accepted.

  • Investor/Landlord · Farmington Hills, MI · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    @Roy N.'s response is spot on. You do not need to provide any more information. In fact, if you provide the information you proposed in your letter you will be revealing personal information about your tenant--the person you now have a business relationship with. You have no idea what the rejected applicant might do with that information--it is none of their business. They do know where your new tenant lives. Why would you ever consider an action which might have a negative consequence with a new tenant/partner/customer in response to a rejected applicant?

    If the rejected applicant is also strong and you have other units that you expect to become vacant soon, you might offer to let her know when a vacancy arises so that she might apply again at that time.

  • Investor · Vacaville, CA · Member since 2016 · 433 posts · 249 votes
    10y

    Generally speaking the more you say the more you open yourself for a frivolous lawsuit.

  • Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
    10y
    Since your main concern, as stated, is avoiding a discrimination filing your doing one of the most counterproductive things possible by writing lengthy document justifying your decision. Not only does that explicitly open up a myriad of angles for a plaintiff to attack, your response looks implicitly super suspect by offering such a rigorous explanation to a putative non-event. Me thinketh thou protesteth too much
  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    10y

    @Elizabeth V.

    If I might supplement @Jeff Rabinowitz's recommendation about directing strong applicants to upcoming rentals.  We will also direct strong, but unsuccessful, applicants to other landlords - who offer similar quality accommodations - in the neighbourhood.

  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    10y

    It has been covered pretty well here so far so some stray thoughts of mine:

    1. Process qualified applications in order of submission. Then you won't have to be in this situation. If you have strong criteria, you don't have to worry about having to consider applications against each other.

    2. Pre-qualify applicants with an in-house application for free before charging a fee for credit & background check. Once people start paying they will feel more entitled to the property.

    3. Never justify your business. If you have chosen someone else for a reason that is not covered by state or federal law, it's not anyone else's business why you chose how you did. Which is why you want to be sure to have strong enough criteria to protect against discrimination claims.

    Skyline Properties
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  • Investor · Blaine, WA · Member since 2016 · 14 posts · 2 votes
    10y

    I wouldn't respond at all. They can't use your words against you if you don't utter any. :)

  • Augusta, GA · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    I agree with the simple statement "An application received prior to yours was accepted.  Good luck in your search for a rental unit".

    That is ALL that needs to be explained.

    Gail

  • Investor · Seattle, WA · Member since 2015 · 77 posts · 46 votes
    10y

    As @Jason Hartley suspected, Seattle's City Council has in fact created yet another piece of counter-productive, pandering legislation that includes a provision legally mandating "first-come-first-served" applicant selection. Fortunately it doesn't take effect til January 1st, so your bacon is not cooked. 

    At that point, we all will need to create very high application standards which will shut out plenty of good applicants. 

    SMH...

    http://www.seattletimes.com/opinion/first-come-fir...

  • Philadelphia, PA · Member since 2015 · 177 posts · 64 votes
    10y

    With everything else in life, the more information you give someone the more you open yourself up to more trouble. Be it a lawsuit or anything else that would require further action from you. The applicant might simply be thinking they were denied instead of someone else "better" being selected. I would simply state that another applicant received the unit. Depending on state/city regulations you might be required to take applicants on a first come first serve basis but it seems like this is not the case for you yet but an excellent reminder of what you need to do in the future.

    If the applicant paid an application fee, they might be concerned that landlords are pocketing application fees when only really looking at a couple candidates.

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