Having your client’s rental application rejected is never easy or fun! You work hard to find your clients apartments that they’ll love, lead showings, and get the rental application into their hands. However, what happens when your client gets rejected by the landlord? You’re back to square one, and probably feeling more than a little frustrated (Understandably.) As an expert coach at Rental Beast University, I get lots of questions from real estate agents who have just had their client’s application denied. Let’s go over 8 common reasons why a rental application is rejected, and what you can do (even before you start searching your MLS and Rental Beast for ideal listings and organizing showings) to determine if your lead is a viable candidate.
Why was my client’s rental application rejected?
There are many reasons why a landlord or property management company may reject your client’s rental application. Here are some of the most items landlords/property management companies consider when reviewing a renter’s application and credit report* :
- Past problems with Rental Situations: The landlord collects information including the clients current address, current landlord’s contact information, current rent amount, time at current address and a previous address(s). The owner wants to know if the applicant has a history of being a good overall tenant who has made rent payments on time and hasn’t violated any portions of the lease. If your client has a rocky past a tenant, they might find themselves with a couple of rejection letters.
- Employment that Suggests Insufficient Funds: Landlords collect present employment, supervisor w/contact information, the applicant’s current position, length of employment, monthly gross income, any other income (including information about their 2nd jobs, freelance work, etc.). The owner may request three months of the most recent pay stubs for each applicant. Many owners require a minimum of 3x monthly income to the rent amount. If your client can’t supply enough information to show they have a sufficient monthly income, its possible that the landlord won’t risk having late (or non-existent) rent payments.
- Inconsistent Bank Information: The landlord will collect current financial institution and account number(s) and will be on the look out for looking for any inconsistencies or red flags regarding an applicant’s financial stability. The landlord will also use bank information to verify any statements the applicant makes regarding income and employment. Red flag may include a history of negative balances and/or insufficient funds-fees.
- A Criminal, Evictions or Notice to Vacate: This can be a huge red flag for an owner as an indicator of potential problems with the renter.
- Broken a Rental Agreement: There are several forms of broken rental agreements. The most common is “abandonment,” whereby the tenant vacates the property and removes all their personal property while rent is due and unpaid.
- Credit Score: 620 or higher is about the average; lower credit scores may be considered by weighing employment history and current income.
- Credit History: Students or recent college graduates many not have enough credit history or no credit history to prove that they can reliably
- Declared Bankruptcy: The applicant filed for bankruptcy which may be an indication to the owner of poor financial decisions.
Ultimately, a landlord is hoping to get a tenant that will pay their rent in full, on time, and not violate the lease.
What Should You Ask the Renter During Your Initial Conversation, Before Your Client’s Application is Rejected?
It’s always exciting to get a new lead! But, before you get started, make sure to pre-qualify your client in a sensitive way to make sure that you’re working with someone who may struggle to find an apartment.
Try saying this: “When we do find you the right rental for your needs, you will be required to complete a rental application. This will include a background and credit check and potentially employment and residence history. Are you OK with doing this? Is there anything I need to know about?”
Likely, they’ll be honest. And, in return, be honest back. Let them know that you might have problems getting them into an apartment and make one of the suggestions below to help them out.
Always be delicate and non-judgmental. This is sensitive information. Establish a baseline of trust with your clients.
Never discriminate or make assumptions about your clients’ past.
What Can You Suggest to the Renter to Help Their Chances of an Approved Application?
While it’s possible that a client may be too embarrassed to disclose, its best for both of you to uncover and address as many issues as possible before your client’s rental application is rejected. If your client lets you know that they are concerned about completing a rental application, here are several suggestions you can offer to the renter:
- Obtain a Cosigner (aka “guarantor”) from a family member or close friend. This will often be the ideal option to address poor credit, no credit, bankruptcy, in short – credit related issues. One common example is a college student who requires housing during the school year. Without credit and/or a full-time job with income to match the monthly rental payment requirement (see above) a cosigner is often the best option.
- Pay Advance Rent in an amount equal to six or more months. Having cash in hand will help diffuse any credit-based issues. This may be particularly important for landlords who cannot accept security deposits. Each state has laws regarding the maximum amount of security money the owner can hold, so additional security deposits many not be feasible.
- Renter’s Letter of Explanation written by the renter which details the reasons why the renter has a poor credit score, glaring issues on a credit report, anything that can help the renter’s case with the owner. Letters like these are more suited to non-corporate based landlords. Often, property management firms which have specific guidelines and are not prone to be swayed emotionally by a renter’s past hardships.
- Credit Repair Service. This method will take time for the renter to bring their score up to an acceptable level for renting. However, if any of the above options are not possible, it may be the only option for the renter. Another advantage to a renter employing a credit repair service is they may put themselves in a favorable position if (and when!) they decide to purchase a home!
When a client’s rental application is rejected, it can be frustrating, This post was written about one of our expert coaches at Rental Beast University. Want to learn more about rentals? We built Rental Beast University so real estate agents of all experience levels could expand their capacity and sharpen their skills to take advantage of the over 50% of the US adult population whose chooses to rent.
To learn more about the Rental Beast platform or to request a no-obligation demo visit Rental Beast for Real Estate Agents.