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All the small details like tenant screening matters when it comes to building a successful real estate business. Just so, making money as a landlord doesn’t happen by chance. You must take many steps to set yourself up for success. Along with finding suitable investment properties in locations that promise steady demand, landlords must also select their tenants carefully through the proper screening process. 

This requires the help of a professional real estate agent who knows real estate law and can use the correct criteria to screen potential residents. Today, we’ll discuss the value of professional tenant screening, its benefits, and the risks taken if you decide to use an automated screening method. 

It’s Your Best Financial Protection

Screening your resident applications is one of the most critical steps to protect yourself financially as a landlord. This process ensures that the person who lives in your rental is financially responsible and able to keep up with payments. 

You can also check a person’s criminal history to see if they would be a risk to your property or surrounding residents. Without doing this check, you can let a resident move in who may be a financial or safety risk to your property, resulting in missed payments and costly damage. 

Proper Screening Prevents Serious Problems – And Fees

When done correctly, the screener will get a complete picture of the applicant’s fitness as a potential resident. However, such thoroughness takes time. It requires a combination of objective data, from multiple pay stubs, bank statements, references, background checks, and even an interview, to ensure the person is the right fit. 

This is why harried landlords often turn to automated tenant screening services that prompt the resident to submit the information that gets evaluated through a computerized system. Though this option saves landlords time, it can leave them open to risks such as:

  • Incomplete Information 
  • Inaccurate Information
  • Fraudulent Information
  • Improper use of information (such as discrimination)

Your other option is to get a professional to do the thorough tenant screening without cutting corners so you can relax. They will use the proper verification methods to determine whether an applicant is qualified to keep up with your property.

You Don’t Have to Worry About Real Estate Law

When you hire a real person to professionally check your rental applicants, you don’t have to worry about accidentally judging a person by criteria that get you into trouble through discrimination. Real estate agents know the law and will stick to the legal foundations of tenant screening. Overall, they can minimize your rental risk by judging people by non-discriminatory criteria like:

  • Proof of Income
  • Debt-to-Income ratio
  • Credit Score
  • Criminal Background
  • History of Evictions
  • References
  • Type of Pets (since some places like apartments can’t have pets over a certain weight limit, etc)

These are objective factors that determine a person’s financial soundness and potential to be a safe resident. It’s vital to adhere to the Fair Housing Act and to avoid judging anyone by protected characteristics. For instance, a novice landlord may have yet to learn that it’s illegal to turn down an applicant because they have a toddler, which can get them into hot water. Protected characteristics include: 

  • Race
  • Color
  • National Origin
  • Religion
  • Sex (including gender identity and sexual orientation)
  • Familial Status
  • Disability

Violating this act can cost you a lot of money (as well as your good name). According to HUD, the maximum civil penalties are

  • $16,000 for a first violation
  • $37,500 for a subsequent breach if a previous one occurred within five years
  • $65,000 if you have two or more violations within a seven-year period

An Objective, Fair Tenant Screening For Each Applicant

Therefore, a professional screener will stick to the meat and bones of what makes a good resident and ignore the factors that don’t matter, like where they come from. This gives you peace of mind that you’re giving every applicant a fair shot and that you’ll get the most suited tenant for your property.

  • Pro Tip: When you list your rental with a real estate agent, you can also be sure that your property is advertised legally. Even the wrong wording can get you into trouble. For instance, “nice neighborhood near good schools” can discriminate against future residents without kids. Check out this list of inclusive property description tips for more insights.

Human-Powered Tenant Screening Weeds Out Inaccuracies

In exchange for faster screenings, results from automated programs don’t go under the same deep scrutiny as under the human eye. Databases from automated programs can produce errors and inaccuracies. If there’s no human to double-check this data, you can end up with an applicant with fraudulent information. Or, you may get information without the details, such as a report of an eviction but without the details. There was even an instance when an applicant’s sibling’s criminal record was mistakenly attached to his background check. Imagine the missed opportunity on getting an excellent resident due to an error that could be fixed with a simple identity check and virtual interview!

Professional Tenant Screening Services at Marketplace Homes

At Marketplace Homes, human-powered resident screening captures the details that algorithms can’t. Hiring a property manager who can double-check pay stubs, rental history, credit reports, and other information can save you a lot of grief. Our pros know real estate law and are experts in maximizing your rental’s earning potential. Contact us today to find out more about using our many real estate services to your benefit.

 

Local Broker Information: https://www.marketplacehomes.com/real-estate-license-information/