By Rachel Davidson (MultiFamilyExecutive.com Article) — Screening prospective residents for financial health and background information is necessary to ensure you’re filling your properties with low-risk tenants.
Surprisingly, a number of apartment operators across the nation are still relying on time-consuming manual screening processes, including calling about a prospect’s rental payment history or sending emails to verify an applicant’s income, to approve residents.
However, there are more-efficient and, more importantly, more-effective ways to screen your prospects. At Alliance Residential, we’ve replaced these manual processes with automated ones. As a result, it’s not only eased the burden on our leasing associates; it’s reduced bad debt and evictions, too.
Out With the Old
At most properties, prospect screening traditionally looks something like this: Leasing agents call an applicant’s former property manager and current employer to see whether there’s any disqualifying or worrisome information, such as poor rental-payment history or inaccuracies in reported income.
This consumes vast amounts of leasing agents’ time. Associates typically have to make numerous phone calls and leave several voicemails for employers and former property managers. Worse, there’s very little incentive for employers and property managers to respond, so it can take days or even weeks to receive a return call.
In addition, regulations have made it increasingly difficult for companies to share information about their employees, and employers often can’t share the requested income information in the first place.
The manual screening process can also potentially pose a conflict of interest. Leasing agents typically receive bonuses based on the number of leases they sign, so it’s possible some team members might not be motivated to uncover negative information about the prospects they’re trying to sign.
Finally, there’s the element of old-fashioned human error. When juggling job responsibilities with the many steps it sometimes takes to obtain the required background information manually, the situation is ripe for good-faith mistakes.
In With the New
Fortunately, converting to an automated screening process isn’t as difficult today as it was in the past. Properties can easily incorporate automated rental payment history from a provider, like Alliance does with Experian RentBureau, and begin collecting job-offer letters or a recent pay stub to verify income.
After Alliance incorporated these changes, we conducted a study to evaluate the positive and negative impacts. We pinpointed submarkets with communities that were still conducting manual screening as well as ones that were using Experian RentBureau.
The study revealed that bad debt was 15% higher at communities that used manual rental-payment history checks, and communities using manual screening processes experienced five times as many evictions.
We weren’t surprised by the findings; we had long been concerned about the accuracy of information collected manually by leasing agents who were faced with a cumbersome process.
Based on these findings, it made sense to eliminate manual screening processes across our entire portfolio. Using simpler, automated processes reduces the amount of time it takes to complete an application, allowing associates to concentrate more fully on the other aspects of their jobs.
Change can be hard, and many apartment operators undoubtedly draw an enormous amount of security from their manual screening processes. But there’s a better, more modern way, and automated screening can provide a powerful boost to your resident screening.