Banner

Training Trivia

It is wise and acceptable to use a criminal background check to eliminate any candidates with a criminal record prior to getting to final interviews when hiring.
Powered by Grace Hill
 
 
Total votes: 33
Home Insider Blogs David Kotowski's Blog On My Soapbox about Resident Screening
Enter your email address for weekly access to top multifamily blogs!

Apartment Blogs


May 21
2009

On My Soapbox about Resident Screening

 Print

Posted by: David Kotowski on May 21, 2009 01:00

Tagged in: Untagged 
User Rating: / 1
PoorBest 

I feel the need to get on my soapbox about an integral part of our industry that I don't think people take very seriously. Resident screening. Every company has their own method of evaluating prospective residents and I'm sure everyone has good intentions, but many of us get caught doing things the old way instead of embracing new technology and information.

I'm a big fan of First Advantage SafeRent. I've used their products in various forms for about 10 years and I am most happy with their new ScorePLUS scoring model. No screening program is perfect, but SafeRent has done a lot to ensure that the companies using their product have as much information as possible to make a good decision. For example, they even take payment history from pawn shops and check cashing companies into consideration now. That's great if your resident profile typically consists of people who may not have a SSN (or even an ITIN).

Why am I bringing all of this up? It's not to make this a big commercial for SafeRent. Far from it. I believe that SafeRent screening works best if people stay out of the decision. I realize this is hard for some of our industry veterans who feel that their discretion and experience is better than a computer program. I disagree. We are not credit experts. Heck, even the credit experts aren't that familiar with current economic trends (mostly because they are brand new AND old habits are changing faster than we realize).

Regardless of what screening company you use it is important that you understand how they arrive at their decision and you support it. In this case, SafeRent is modeled after actual apartment rental history. Some might disagree that someone with more outstanding debt might get accepted compared to someone with a new credit history who only has a small percentage of unpaid loans that gets declined. I have to trust that the best decision was made based on actual histories of renters with similar credit profiles.

I started out conceding that no screening program is perfect. Neither are people and I would rather the decision be based on a mathematical model that is consistently enforced than a person who might not be viewing the information the same way all of the time (despite best intentions). Not only are your owners expecting you to do the right thing, but your residents are too.

Find the model that works best for your company and your resident profile. Then let it do what you're paying for. I would bet that your delinquency lowers and overall you have a community of good, happy residents.


Comments (11)Add Comment
67
written by Mark Juleen, May 21, 2009
David-

Welcome to the blog club here at MFI! We've been eagerly waiting for your thoughts and look forward to more.

Great post. Screening is definitely something that is taken somewhat for granted in our industry. I agree with you that many may be overriding what should be something that is systematic. As you said, no system is perfect, but being consistent with whatever model you choose is what is important.

Mj
500
written by Don Wood, May 21, 2009
I agree that you need to stick with your policy and procedures. There are several good screening tools out there, but as you point out you have to accept the answers from the system. That being said, the system needs to have your company criteria setup to arrive at the correct answer.
82
written by Gerry Hunt, May 21, 2009
Good post David. I agree that we need good systems and need to follow them----MOST of the time. When my communities are at 95%, I can afford to turn folks away. When I am at 60% and trying to reposition a property in receivership, I might over-ride the decision of the screening company. I had a gentleman that was denied because the credit repost was showing that he owed and apartment community in 2003. He said he didn’t owe them. I ask for proof –he supplied it, plus I called the Corp office for the community just to double check. We are moving him in—with a higher Security Deposit. I could offer many other examples of times when I have allowed someone to move in that was denied by the system. Any time that I do this, it is documented as to why I made the exception. Policies and procedure are guidelines that should be applied intelligently, using the tools that we have, and using GOOD judgment.
73
written by Heather Blume, May 22, 2009
Great to see you blogging, David!!!

Yes, No and the little thumb out to the side meaning maybe are pretty good guides, but I agree with Gerry. If the company says no, but they can override with proof, I gotta take their proof. Mistakes are made on credit reports and with billing companies all the time these days. And despite that song from "free credit report dot com" being stuck in my head all day (and I know I'm not the only one that insidious jingle had attached itself to...) I don't run a credit check on myself hardly ever. Most people don't so sometimes they really ARE surprised by what pops up when they apply.

If they can't prove it, don't move them in. smilies/smiley.gif That simple.
1195
written by David Kotowski, May 22, 2009
Thanks for all of the feedback.

Gerry, I don't mean for this to sound rude, but you're a great example of what I was referring to when I said we were stuck in our old ways. I have complete faith in your abilities and realize that you have been doing this a lot longer than I have. To me, the situation is way bigger than this blog post, so I don't think there is anything I can contribute at this point that will have positive results.

Heather and Gerry - I agree that mistakes can be made. I just don't see how you can choose one item on a credit report over another as a basis for acceptance. In this case, how do you know that the apartment collection was THE ONLY REASON that the person was declined? Since Gerry and I are using the same SafeRent system, I can tell you that applicants are not declined solely on the basis that they have an apartment collection. I believe that there were other reasons that we are ignoring just to get to a higher occupancy. That might not necessarily be a bad thing if occupancy is your goal as Gerry stated was important in her case.
73
written by Heather Blume, May 22, 2009
AHH! Okay, I'm used to ON-SITE and they usually tell you also why your candidate has been denied. If it's a list of like 15 things that pops out, then yeah, that person is not a good potential resident. But, if it's just one thing and they do dispute it, then I'd say give them the chance to fix it.
1610
written by Rick Hevier, May 24, 2009
@Gerry: You make an excellent point about a more holistic approach to screening applicants. Treating our customers in a manner consistent with the FHA doesn't mean we have to turn into zombies. I worry when we condense a person to a number, driven by fear of the FHA.

We have a diverse community and we're obsessive about consistent business practices and FHA, sometimes to the angst of our long-term customers. But, I gotta tell you that sometimes the best customers we've had were the ones that we turned down, but they didn't give up! These are the customers that ask to meet and plead their case, explain their circumstances and uncover information that a mathematical model can't divine.

About 5 years ago I began experimenting with an idea. In cases where a prospect did not fulfill our credit expectations, I began to offer him/her an opportunity to pay all or part of their year's lease upfront. Guess what? You'd be amazed that, rather than balk, a pretty good number of prospects have done so! Of course, I'd like to believe we have the kind of property that people would want that badly.

When evaluating applicants, we're looking at two concepts: will they pay their rent (income, employer verifications, credit) and will they be good neighbors (landlord reference)? We're in the business of renting apartments to anyone who can meet those two criteria.

The holistic approach has to be approached in a guarded manner, for obvious FHA reasons. But, if we are careful to apply our outlook in a consistent manner to all applicants, we have nothing to fear but fear itself, and we will do real justice to our prospective customers.
82
written by Gerry Hunt, May 24, 2009
If we make an exception, documentation is extremely important! While it may be easier to go into ‘zombie’ mode---we are dealing with HUMAN BEINGS and stuff happens in life.
I agree that we must be willing to apply our outlook in a consistent manner to all applicants.
1013
written by Tara Smiley, May 25, 2009
What options are people offering other than "approved" or "Denied"? Our company has options as Rick was mentioning - cosigners, one or multiple months addendum upfront. People are willing to do it and I am surprised by the growing number of applicants who not only know to expect it, but directly volunteer that their credit is shot and ask for the options outright.
1610
written by Rick Hevier, May 25, 2009
@Tara: We've probably generated more than $200,000 in revenue over the years with prepaid rent - in most cases at least 6 months up to an entire year up front. In many cases, these prospects continue to stay with us, sometimes renewing the same deal as the year before, but sometimes with fixing credit or better circumstances.

For example, we include mortgage payments when considering debt load, even if the mortgage payment is covered by a lease or an ex-husband/wife. This can disqualify an applicant, but with pre-paid rent, the person can sometimes solve this issue during the course of his/her first lease.

We always apply pre-paid rent to the "back-end" of the lease.

We haven't taken the co-signers approach since we would prefer not to accept college students with parents co-signing.

We've never had a collection issue with these circumstances, and the long-term financial benefit is far more than the first-year's $200,000+.
2454
written by Cate Chase, October 27, 2009
It's always scary to think aparmtment managers don't use the best methods to screen potential residents. Of course, no matter what methods are used, you never really no how a person will act or how they might affect the apartment community. This was great to read after writing a blog post today about how residents handle situations in their apartment buildings: http://nomorehomemadeflyers.com/
feedSubscribe to this comment's feed
What Do You Think?


security code
Write the displayed characters


busy

Insider Blogs

Brandon Hollembeak The mobile payment revolution is beginning written by Brandon Hollembeak
  Jim Davoren of Apartments.com buying lunch from a food truck by swiping his credit card on an iPad. Chances are you've either heard of or seen mobile payments happening, as opposed to this time a year ago, when the conversations were just sta ...   (Read More)

Tashina Wortham 21 Ways to Show You’re Social [in pics] written by Tashina Wortham
Social Media is powerful—that’s pretty much recognized across the board. But a massive social following doesn’t just happen overnight (unless you're like Jeremy Lin or Madonna). Which is why it can be beneficial to promote your comm ...   (Read More)

Jeffrey Spanke "Rest in Peace, George Carlin." written by Jeffrey Spanke
Think of the resident that you hate. But I don’t hate anybody! I love what I do, and everyone is my favorite person in the world. I work in Moonbeam Twinkle Apartments, just under the mystical rainbow of Avalon, down the street from the chocola ...   (Read More)

Judy Bellack What does the Satisfacts Research survey on “All That Apply: ... written by Judy Bellack
NAA’s UNITS magazine published a Satisfacts Research survey in their April issue titled “All That Apply:  Residents’ Leading Marketing Sources.”  The web-based survey queried 34,000 apartment residents who had m ...   (Read More)

Brent Williams Fair Housing Does Have “Costs” And Should Be Part Of The Dis ... written by Brent Williams
I have a one year old daughter, so when I think about where I want to live, one of the major elements is simply whether there are other families with young children in the area.  So imagine me touring an apartment community and asking if there a ...   (Read More)

Read More Blog Posts