Eastern Michigan · Member since 2018 · 83 posts · 144 votes
Hi BP community I'm looking for your opinions on tenant screening fees for credit and background checks.
We have a SFH for rent and were going to do the screening process through Cozy.co since it seems really easy for both parties--but they charge the prospective tenants $40 per person. So for a couple it would be $80. That seems like a lot of money to me-- the community our rentals are in is a small working class community where people don't have a lot of disposable income (Adrian MI).
So I am wondering for those in similar communities, what does your screening process look like? Do you use a website? In your opinion is $80 a lot of money for a couple of background checks & credit reports?
I don't want to scare away a potential great renter just because of the application process-- but don't want to get a terrible renter because I skimped on the process either.
@Tiffany Roberts I use cozy for screening and rent payments. if you ask every applicant to pay this then you will probably piss off a lot of people. i pre screen and state my qualifications in writing. and verbally before requesting the screening. this scares off the deadbeats. i actually like the high price as i feel it scares potential bad tenants away. I have had to denile a few people that went through tge process because thay had things like evictions and assault charges. i also has some with a 750 credit score pay for themselves and spouse only to turn down my acceptance because they wanted to buy instead. i receive 8 - 12 applications but only cozy screen 2-3 of them based on the prescreen.
@James Wise. I didn’t say there was anything wrong with this, just that you could say ethically it’s not really right to make money off background checks. It clearly doesn’t cost 100 dollars to run a background check on one person, considering most people charge half of that or less.
@James Wise. I didn’t say there was anything wrong with this, just that you could say ethically it’s not really right to make money off background checks. It clearly doesn’t cost 100 dollars to run a background check on one person, considering most people charge half of that or less.
Interesting take. As an entrepreneur yourself I would assume you'd have no objection to the market determining the price & the business building profit into every activity that they perform.
@James Wise. I didn’t say there was anything wrong with this, just that you could say ethically it’s not really right to make money off background checks. It clearly doesn’t cost 100 dollars to run a background check on one person, considering most people charge half of that or less.
Interesting take. As an entrepreneur yourself I would assume you'd have no objection to the market determining the price & the business building profit into every activity that they perform.
I have no problem with any of that but 100 dollars in general and in this area is probably 4 times the “market rate”.
@James Wise. I didn’t say there was anything wrong with this, just that you could say ethically it’s not really right to make money off background checks. It clearly doesn’t cost 100 dollars to run a background check on one person, considering most people charge half of that or less.
Interesting take. As an entrepreneur yourself I would assume you'd have no objection to the market determining the price & the business building profit into every activity that they perform.
I have no problem with any of that but 100 dollars in general and in this area is probably 4 times the “market rate”.
Sure........But the thing is, nobody forced you to pay it. So your actions have helped to prove that the market supports this fee that they are charging.
@James Wise. I didn’t say there was anything wrong with this, just that you could say ethically it’s not really right to make money off background checks. It clearly doesn’t cost 100 dollars to run a background check on one person, considering most people charge half of that or less.
Interesting take. As an entrepreneur yourself I would assume you'd have no objection to the market determining the price & the business building profit into every activity that they perform.
I have no problem with any of that but 100 dollars in general and in this area is probably 4 times the “market rate”.
Sure........But the thing is, nobody forced you to pay it. So your actions have helped to prove that the market supports this fee that they are charging.
Well I wouldn’t have paid it, but I wasn’t going to let them send it to collections over it. Again I think we’re sort of discussing two different things.
I am not saying anything about market pricing or what the market will bear and so on. I was merely stating that one could argue charging 100 bucks for a background check is unethical. I am not saying don’t do it, I’m just saying the argument could be made that it’s unethical. You’re welcome to charge whatever you want, and operate your business in any manner you want (within the legal boundaries).
I used to have some rentals in a college town and offered a $15 discount if they brought a printed credit report from Credit Karma since they can get their own report for free. A lot of tech-savvy students and young people would take advantage of that. I would still always run an eviction and criminal report.
If you wanted to get credit/criminal check for cheaper and thus pass savings to tenant you can try ntnonline.com. Gives you info on credit,evictions, any judgements, criminal. I think it’s like $18 per application you process. You the landlord would have to setup account and process the application.
@Ana M. This is similar to how we handle it, perspective tenant pays directly to the screening service not us. I don’t recall who we use but it is one Realtors have access to as my husband is a agent. I believe it is $35-40 per adult too.
For what it is worth, we really grappled with the pricing for our Tenant Screening in the RentRedi platform and settled on $35 for the TransUnion Full Credit, Background and Eviction. We talked to many tenants and found they would pay more if they had to but felt that 40-50 too much especially when they might be applying to more than one unit.
Ultimately we decided on lower margins in favor of the tenant.
In my area that's about right. Tenants expect an application fee. Make sure you give them a list of qualifications ahead if time so they don't waste their money if they know they don't qualify. If they don't even have $40, worry. Tenants looking for a new place should have *some* money saved up for move expenses.
I'm in SE Michigan, and recently increased my app fee from $30 to $45, and use rentecdirect.com to do my credit/SSN/eviction screening for $29.45 each. I call previous and current landlords and I verify employment myself. Other landlords in my market are everywhere from $25 to $75.
If I have more than one applicant/group, I screen whoever looks best on paper first (income, how long they want to stay, if their move in date works for me), and return the fees to those I don't run the full background check on. I am not out to make money on app fees, but also don't want to lose money screening people that won't qualify. Most that are willing to pay will qualify, I've had a few that were surprised to be turned down when I found evictions or bad landlord references.
I charge $75 because I want to weed out the people with no money. I pass out a pre-qualification list to help ensure that they are qualified before they pay the fee. I refund fees for any applicant we do not run. I have only had one person lose an application fee and not get approved.
Good luck with your rental! I lease a townhouse and purchased the AZ specific BP landlord docs for $99 (I think). I wound up using the included BP tenant app as our initial screener. When I found prospective tenants, I still had a few questions, so I had them use the TransUnion tool that sounds similar to what you described. It was $40 per tenant, but I could pay or ask the tenant to pay.
Maybe a mixed strategy would work for you. A manual app to weed out the wrong choices, and then you could decide to pay or charge the prospects you feel are a match...
Hi BP community I'm looking for your opinions on tenant screening fees for credit and background checks.
We also use Cozy.co, but as a confirmation. It's sort of a three step process for us:
1) Real estate agent we use does verbal review with the potential tenant indicating minimum requirements, most importantly income 3x rent and no evictions, and that eventually we will do a credit/background check for which they will need to pay $40.
2) If minimums are met and they are interested, they get a paper application to complete and submit. If they return the application, we make an initial review of the qualifications.
3) Once we get someone that qualifies and looks good, we request them to go to Cozy.co (after we send a link) and they pay the site for the report. (Personally I like MySmartMove report better, but Cozy.co works.) Then we make a final decision based on the report and application, along with follow up on previous landlords, etc.
We have only had a couple of people not pass the Cozy check after the initial review. Most times the difficult tenants won't make their way through this process. They are looking for a landlord that doesn't check backgrounds, doesn't give them requirements, etc., and stay away from those that do. Be that landlord, and you'll save yourself a lot of trouble. Believe me, we have purchased rentals with tenants in place that took advantage of bad landlords that didn't check backgrounds, etc. Good luck!