Removing this step could lead to greater efficiencies.

The expectation of leasing professionals seems clear on the surface—convert leads into leases as quickly as possible.

After all, they’re expected to respond to a lead within 24 hours in most cases, required to follow-up on leads daily and ultimately earn bonuses on signed leases.

But there’s one leasing agent responsibility that’s seemingly contradictory to the end goal of converting leads to leases: Screening. Asking a leasing agent to get an application and send it to a screening provider to determine a prospect’s creditworthiness is definitely necessary. But most owners and operators also ask their leasing agents to call the applicant’s former property manager and employer to fish for negative information, such as poor rental payment history and inaccuracies in reported income, risking the leasing agent’s own bonus.

Today, some owners and operators, such as Alliance Residential, are recognizing the contradiction — as well as the considerable potential for human error in the manual checks. And they’re opting to either forgo payment history and employment checks completely or implement automated processes.

Alliance’s manual checks were time-consuming and cumbersome, requiring leasing professionals to call previous property managers and employers after receiving an application from a prospective renter. Often, the leasing professionals would have to leave messages with property managers and employers who could take days to return their calls.

“Several years ago, we started having operators request that they no longer be required to complete manual rental reference checks, and we responded by allowing them to drop this requirement provided they had the ownership’s approval to do so,” Rachel Davidson, Senior Vice President of Performance for Alliance Residential, says. “After having this practice in place for more than a year, we decided to do a case study on the impact this had on bad debt.”

Alliance identified submarkets where the company had properties that were still completing manual rental reference checks, as well as properties of the same class that didn’t conduct manual checks. That gave Alliance an apples-to-apples comparison of the communities.

The case study found that bad debt was 15 percent higher at communities that did manual rental payment history checks than at communities using automated rental payment history through Experian® RentBureau®.

That made the decision to completely eliminate manual checks easy.

“We were always concerned about the accuracy of information collected manually, but it was the norm to complete those checks so we did,” Davidson said. “After hearing operators raise their concerns regarding the time it took and the delays in screening results, it was important to see if what we had always done made sense.”

Whenever there’s a manual process involved, accuracy can become a challenge, Jim Kjolhede, President of Satterton Enterprises, says. That challenge is exaggerated when it contradicts the goals of both the leasing professional and a prospective resident’s previous community manager.

“I don’t want my onsite associates calling anybody, because it’s a waste of their time and neither party is going to be completely honest,” Kjolhede says. “The leasing agent wants to earn their bonus, and an applicant’s former property manager doesn’t have any incentive to report a negative experience with their former resident. To top it off, the applicant could find another place to live while the leasing agent is waiting for a callback from the prior manager. If the applicant has a good credit score, they have it for a reason: They pay their bills on time.”

But not knowing how well an applicant has paid his or her rent in the past is a risk Alliance and other owners and operators aren’t willing to take. That’s why they’ve turned toward automated rental payment history.

Regulations have also made it difficult for employers to share employee information, including their income and work history.

“It was becoming extremely difficult to obtain these checks from many employers, and in some markets, there were costs associated with collecting the information,” Davidson said. “We are having success with simply verifying income via a paystub and using credit as an indicator of risk.”

Overall, the benefits of eliminating manual employment and rental payment history checks have been many, Davidson said.

“We are able to provide almost immediate screening decisions, improving our customers’ experience and, in some cases, expediting their move-in dates, which in turn has reduced vacancy,” Davidson says. “It has also eliminated a good amount of associate burden and reduced the risks involved with making screening decisions based on subjective information.” —LTM