It’s the final step of the rental process. You went through the application collection and tenant verification, and you’re finally ready to select who will reside in your rental property. But are you sure you’re making the right decision? Did you do your due diligence in verifying each of your tenants? Is your screening report comprehensive? If we sound like an incessant parent asking about when you’re getting married, it’s because we just want what’s best for you, just like (most of) your parents.
Like any course of action, a mistake in the middle of the renting process will affect the outcome. Here are some common mistakes that could lead you to selecting the wrong tenant.
Mistake No. 1: Impatient Tenant Selection
When it comes to properties that have been on the market for a while, many realtors will jump at the first tenant that applies. Sometimes, they’ll even forego the tenant screening process and approve the renter on the spot.
If you’re a loyal reader to this blog (all six of you), you know that we are big sticklers about tenant verification, and with good reason. It is the best way to differentiate tenants from each other, and a thorough screening report should easily clarify who is the best tenant for your property. In the case of a property with few applicants, you have to be patient for the right renter to apply. You may want to market your property more aggressively or lower the rent price instead.
Selecting a bad renter just to get the property off your hands is not worth the commission. Eviction is a long and ugly process, and as we’ve mentioned in the past, giving a landlord a tenant who eventually gets evicted can ruin your reputation as an agent.
A problem tenant will most likely ruin the valuable relationship with that landlord and cut off any referrals to future leads as well. Furthermore, you may have to appear in court for the eviction hearing and your lack of screening will be in question.
Mistake No. 2: Incomplete Tenant Verification
The next worse thing from no tenant verification is an incomplete tenant verification. An example of this would be using only a credit report as your tenant screening information.
While credit reports are a good measure of one’s financial stability and responsibility, they do not have valuable information like criminal history. Going to jail alone does not affect your credit, so it is possible for someone with a criminal record to have a good credit score.
It is often difficult for ex-cons to get a job, which in turn makes them less likely to get rent in on time. While a criminal history should not automatically disqualify someone from getting approved for a property, it is something your client needs to know about before selecting your tenant.
Additionally, you should be contact personal and professional references to get the idea of your applicant’s character. Talking to a boss or close family member will show you things that can’t be seen on paper. You should also collect important items like pay stubs, copies of driver’s licenses, and bank statements. All of these are just as important as a comprehensive screening report.
Mistake No. 3: Paying for Tenant Verification
In contrast with the above example, you did your homework on all your applicants and completed a comprehensive verification on each one. However, you had to pay for your third-party service, and had to enter every tenant’s information from each application manually.
While this won’t really affect your tenant selection, you should never have to pay for something that you can get for free. There are tenant verifications that are of no cost to the agent yet provide comprehensive screening reports that consist of credit reports, background checks, and eviction history.
Mistake No. 4: Protocol Errors
Basic protocol mistakes are more common than you’d think. While it may be unintentional at times, these mistakes can be avoided by being process-oriented. Here are some important steps of the renting process that often go unchecked.
Sometimes an applicant will fail to mention that he or she will be living with roommates. As a realtor, it is your job to find out this information so that you can collect applications from every adult who will be living in the property. This includes adult children or dependents as well, even if they will not be paying rent.
Overcharging a Security Deposit
Sometimes you will want to raise the security deposit on someone who is a bit riskier than a normal renter. For example, someone with a criminal history, a student renter, or someone with a pet. However, it is important to know that the maximum you can charge for a security deposit is two months’ rent for an unfurnished property and three months’ rent for a furnished property. Overcharging a security deposit can lead to a court date with your applicant.