We’ve written at length about the importance of accuracy in tenant screening – devoting a ton of real estate to the applicable provisions in state and federal consumer reporting law – notably the Fair Credit Reporting Act (FCRA).
We need to know the law, certainly, given the vigor with which regulators and trial lawyers pursue such claims. But concentrating on the law sort of misses the point – that there is (arguably) an even better reason to concern ourselves with the accuracy of tenant screening reports.
Accurate reports drive better decisions. Better decisions are reflected in improved occupancy, resident profile, NOI and equity.
Accuracy in tenant screening implies two things. First, the report is thorough. Secondly, that which is reported is true!
Perhaps the most common error in tenant screening is a failure to search the public record for AKA’s and additional addresses (disclosed or undisclosed).
An equally common error is reporting criminal and eviction records without doing the additional work necessary to confirm they are correctly associated with the applicant (versus someone else with the same name).
We know from experience that roughly 30 percent of valid criminal and eviction hits are the result of these “conditional” searches. Ultimately, a failure to conduct such searches is a threat to occupancy, resident profile, NOI and equity.
Rental references have lost favor over the last decade or so – in response to the hope that credit based algorithms (instant answer type products) will be both expedient and accurate (or predictive).
The problem is two-fold. First, there are delays in reporting of eviction records. California waits 60 days to post eviction judgments to the public record, for heaven’s sake. Ironically, it is the recent eviction that is most likely to bite us.
Rental references help insure against these public record “blind spots” by providing the story behind a filing (for example) – and by making us aware of unlawful detainer actions before they are adjudicated or find their way onto the public record or credit report.
Accurate reports can be quick, but they cannot be instant. They will generally take between 30 minutes and a few days – depending on the services included, the day and time of submission and the responsiveness of landlords, etc.
Accuracy costs a little more. Comprehensive reports – reports that include conditional public record search logic, record matching, rental references and custom recommendations – tend to run in the mid $40’s (per person) – which is consistent with the market these days and generally not an impediment to the leasing process.
Right Thing to Do
Focusing on the accuracy of your tenant screening reports is the right thing to do. It is the right thing to do for the business – occupancy, resident profile, NOI and equity. It is the right thing to do for residents – including prospective residents. It is the right thing to do for everyone – with the exception of bad tenants!
Categorised in: Tenant Screening