It is not a secret that manual screening is costing time, money and tenants. However, if you do not have an idea about screenings, you are in the right place.
So imagine this: It’s 7:30 p.m. on a Friday night. A rental application just landed in your inbox. The applicant, a working mom with a frustrating schedule, expects a quick response—just like more than 80% of consumers who expect immediate replies, even after working hours. But with traditional manual screening processes, she’ll likely be waiting until the next work day. In the meantime, she might apply elsewhere, potentially slipping through your fingers.
This scenario isn’t uncommon. Many landlords and property managers still rely on manual tenant screening, which is not only time-consuming but also costly and prone to human error.
Let’s understand why property managers are not trying to automate more and address the hidden costs of manual screening and explore how automation can revolutionize your process by increasing accuracy, reducing bias, and saving valuable time.
Why Do Property Managers Not Try To Automate More?
Property screening gives the perfect opportunity to automate, as it involves processing high volumes of information with repetitive tasks. However, many property managers use manual processes.
Now let’s understand why it is so. Here are the main reasons:
Incomplete Applications
If you ever had an experience with working with applications, I am sure you know how people forget to mention important information about themselves: their work, income, etc.
When this is the case, your team dives into the sea of documents, sending follow-up questions, trying to get as much information as possible, to clarify details with applicants. At the same time, renters do not have a clear understanding of exactly what they need to provide, so they keep asking for updates and news. This creates many delays and obstacles that can be avoided.
Context Switching
You may wonder how context switching takes place, so imagine: a leasing agent starts reviewing an application, notices errors, such as missing information, and emails the applicant. While the agent is waiting for a response, they move into the next application to manage their job. Later, when the applicant responds to the email and sends the missing details, the leasing agent has to go through the application once more to refamiliarize themselves with it. This can repeat dozens of times throughout the day, making it difficult to focus and work productively.
Limited Underwriting Expertise
Property screening is not the primary role for most property teams, as they do not come from mortgage underwriting backgrounds. Moreover, leasing teams face turnover of 33%, in comparison to the average 22% for other spheres and industries. This makes it more difficult to maintain consistency in screening practices.
Balancing Speed With Thoroughness
So, we can say that you could simplify your screenings by just looking at credit scores. This would increase the speed of the process and ease automation, which can be applied without any difficulties. On the other hand, narrowing down your screening criteria makes you vulnerable for possible risks, such as opening you up to fraud or approving tenants who might not be able to afford their rent because of some circumstances that credit scores alone will not show.
The Hidden Costs of Manual Screening
1. Time Consumption
- Delayed Responses: Manual screening often means applicants will have to wait longer for decisions. This will lead to the potential loss of tenants.
- Administrative Burden: Tasks like verifying employment, contacting previous landlords, and running background checks are really time consuming, and will divert focus from other essential duties.
2. Financial Implications
- Lost Revenue: Vacant units mean no rental income. Prolonged screening processes can extend vacancy periods, impacting your business till its core.
- Eviction Costs: An unreliable tenant can lead to costly evictions. Evictions can cost landlords thousands in lost rent, legal fees, and property damage, which you definitely want to avoid.
- Costs of manual screening: The time, effort, and costs of manual screening required can cause unwanted expenses and overall huge discomfort.
3. Human Error and Bias
- Inconsistency: Manual processes can lead to inconsistent evaluations, increasing the risk of overlooking red flags (NAA).
- Unintentional Bias: Without standardized procedures, personal biases can influence decisions, potentially leading to discriminatory practices.
Better Screening: The Value And The Cost
After understanding how manual screening works, let’s now discuss how better and faster screening impacts you as well as your business. At first, property managers think that the applicants usually give them 15-30 days’ notice, so taking a couple of days to analyze applications will not hurt them. However, that does not include important factors on how people make decisions today.
Speed Builds Trust
Applicants start to lose confidence when they wait for an answer for 2-3 days. Applicants are more likely to sign a lease when they get their response on the same day. Even if you end up signing a lease with a tenant, late responses mean that you need more leads in your funnel to get the same results. However, more leads mean higher marketing cost and more work for you and your team to do.
The Occupancy Connection
Two ways in which better screening affects occupancy:
- Applicants are engaged and confident when the response is quick
- The leasing team can focus on selling and generating leads, if they are not stuck chasing documents and missing details.
This means that even a small improvement in occupancy can increase and improve your revenue over a year.
The Risks of Not Leveraging Technology
Ignoring technological advancements in tenant screening can expose you to several risks:
- Fraudulent Applications: Manual checks may fail to detect sophisticated fraud attempts, such as fake employment records or altered credit reports. Automated systems, however, can quickly identify discrepancies and reduce fraud (Experian).
- Legal Non-Compliance: Failing to adhere to fair housing laws can result in legal repercussions. Automated systems provide compliance by standardizing the screening process and decreasing the likelihood of discrimination (Nolo).
The Benefits of Automated Tenant Screening
1. Increased Efficiency
- Speed: Automated systems can process applications 24/7, providing instant credit and background checks, leading to faster decision-making (Experian). This will save your time for more essential processes.
- Reduced Workload: Automation handles repetitive tasks, allowing your team to focus on more strategic activities.
2. Enhanced Accuracy
- Comprehensive Checks: Automated systems allow you to access extensive databases, ensuring thorough background checks and minimizing the risk of overlooking critical information.
- Consistency: Standardized criteria ensure every applicant is evaluated equally, reducing human error and bias (NAA).
3. Cost Savings
- Reduced Vacancy Periods: Faster processing means units are filled quicker, maximizing rental income.
- Lower Administrative Costs: Automation reduces the need for extensive manual labor, leading to cost savings.
Data-Driven Arguments for Automation
- Reduced Turnover: Consistent and thorough screening leads to higher-quality and reliable tenants, decreasing the risk of turnover rates and associated unwanted costs.
- Improved Tenant Satisfaction: Quick and transparent processes enhance the applicant experience, leading to higher satisfaction and retention rates.
Implementing Automated Tenant Screening
Transitioning to automated screening involves:
- Choosing the Right Platform: Select a solution that will integrate seamlessly with your existing systems and meet your specific needs and requirements.
- Training Your Team: Ensure your staff understands how to use the new system effectively.
- Monitoring and Evaluation: Regularly assess the system’s performance and make necessary adjustments to optimize results.
Conclusion
Manual tenant screening is fraught with hidden costs that can significantly impact your property management business. Implementing automation not only streamlines the process but also promotes accuracy, minimizes bias, and saves both time and resources. In today’s competitive rental market, investing in automated tenant screening is not just a smart move—it’s a necessary one to stay ahead and ensure the success of your property management endeavors.
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