Requiring application before showing? 2 part application fee?

Question

Hello all,

The below questions come from a landlord friend of mine I help out on occasion:

Wondering if anyone out there requires paid (I use aparments.com) applications to be submitted before showings? With the plethora of pictures you are able to post online, virtual walkthroughs potentially available, etc, the idea hit me as a way to potentially eliminate people not showing up for scheduled showings.

Speaking of applications, how much do you charge for an application fee? Of course using apartments.com it collects the $29.99 +tax directly from the applicant. Looking in my area it seems a lot of companies charge between $50-75 (the state has no cap on fees). I would like to be able to pay an assistant to call and check references, work history, etc. so have thought about potentially charging a second fee after they see the property which would go to the assistant to make calls. In my head this seems like it could logistically be problematic as they would be paying a fee with no new information as in theory all the information was submitted in the apartments.com application. So would be going to them and saying, "You have seen the property, I now need a second fee to finish checking your application if you are still interested"

Thank you all for your help!

Chris London · Answer

One of my goals as a PM is to have as many qualified applicants as possible to choose from.

I prescreen with e-mail. I respond quickly and politely. For the well-qualifed applicants, they are likely deciding between a few places. Treating them with respect during the process may be the difference between my rental and someone else's. I also schedule showings back to back in 15 min intervals. If I end up w/ a no-show it's not as big a deal and also having potential applicants see other people viewing the property helps get applications in quickly. Asking someone to pay before they see the property is just one more reason a well-qualified applicant will look somewhere else.

Patrick M. · Answer

I don't charge a thing. I leave that to Zillow.

I have every applicant fill out a preliminary, free application. I owe it to my tenants to make sure I know exactly who will be entering my building and to any apartment. My tenants are young professionals and they have a lot of nice things, they also have a lot of nice things in the storage area. I don't want to allow someone in to case the place, or a nosey neighbor/landlord or someone who just wants to spend a Saturday shopping downtown and - "oh, how 'bout we check out this apartment for gits and shiggles."

When I have met with them, vetted their understanding of what the potential lease terms are and they wish to move forward- they will go onto Zillow to do the background/credit.

What I have found- now that my market has become white hot, is that 1. Price is weeding many out, 2. The savvy ones have paid their Zillow fees up front because they know the market is extraordinarily impatient, and they can apply them across multiple properties. This has allowed me to already know a lot about them at walkthrough and I can seal the deal on the spot (with deposit) and call off the other showings.

Sunny Hon · Answer

Hello,

States usually have a limit on application fees. You’re setting yourself up for a lawsuit!

Frantz Joseph · Answer

@Russell Brazil

Every state is different. This is a great way of getting tire kickers out your way. People who pay the fee amd get pre approved are not waisting my time. I take them very serious. With the demand that exist for rentals currently in dealing with only assertive serious people who don’t waste no time.

Russell Brazil · Answer

Sounds like a scam to me. If I wanted to rent an apartment and they wanted money before I could even aee it, Id report to the states attorney/district attorney as a scam.

Jonathan Jordan · Answer

Thank you all for your replies!! Very helpful!!

Nathan Gesner · Answer

I'm managing around 400 rentals. We pre-screen them through our scheduling software and by talking to them in person. When they submit an application, we qualify them and then they can move that application to any rental within our inventory that they qualify for. Our rental market is very competitive, with sometimes only a few apartments or houses on the market at once. It wouldn't make sense to screen someone when I may not even have what they are looking for.

As for application fees, you need to study your market and determine what's common and fair, then adjust based on your own business model. I know some areas that charge $75 or more per applicant, whereas I charge only $30.

Drew Sygit · Answer

We often require prospects to apply before they can see a property - yes, we lose some qualified prospects, but we win bigger via weeding out unqualified time-wasters.

We charge a $25 app fee which only covers our hard costs for screening report, so no refund issues.Can't see how the 2nd fee would go over well, unless you are in a super hot market. Our opinion is your friend is pinching pennies too hard! How much would a real estate agent in his area charge to find a tenant? In Metro Detroit the cost is one month of rent. Should be able to easily afford to pay an assistant far less than that amount.

Scott M. · Answer

I disagree with this approach but it doesn't make it wrong.  Just my opinion.

Prior to COVID we used heavy pre-screening for individual showings but always had open houses as well.  When COVID hit and we were not allowed to show property traditionally we changed to an application first model.  Difference is, once the app was submitted we did our due diligence and only those that were approved were able to see the home in person (again, because of COVID restrictions we were all limited).

I think it is a bit clunky to do the app/showing for all who submitted an app/those who are still interested charge a 2nd fee/complete due diligence.

If I were a tenant that is a process I would pass on. Would also make me more inclined to ask for my app fee back.

Joe Splitrock · Answer

@Jonathan Jordan one problem I see is if they apply and you show them the property, that implies they passed your application process. I have never heard of anyone charging two application fees. I prescreen, but it doesn't involve credit reports or application fees. We just have the tenant self state income and some other qualifying questions.

I do know some property management companies in my city charge screening before they show properties, but they are leasing many properties. The applicant can pay once and look at 10 or 20 properties, so in that case it is very likely they will find one they like. Apartments.com does let people move their application to other properties, which is similar in concept. In some markets you may be able to require application before showing, but you are basically preapproving, so be careful. This can be a problem if you show the property to a protected class and then all the suddenly they are not approved (after you see what they look like).

Requiring application before showing? 2 part application fee?

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