Streamlining the Rental Application Process

By Paul Willis |

| Updated

6 minute read

By increasing the sophistication of resident screening methods, apartment operators are mitigating risk, providing better experiences for prospects and reducing the strain on hardworking associates.

The practice of screening residents has been part of the apartment landscape for decades. But as tech continues to create previously unattainable efficiencies, it has become increasingly clear that many traditional screening methods are in major need of a refresh. 

Application fraud is on the rise, and fraudsters are becoming more adept at circumventing the system. Most savvy apartment operators already have moved on from requiring onsite associates to manually verify a prospective resident’s income and employment history, which in itself helps to combat fraud. 

“In the past, we could receive a credit report from a bureau, but our teams always had to perform a manual ID verification, paystub verification and employment verification,” says Amy Weissberger, Senior Vice President of Corporate Strategy at Morgan Properties. “Many of those pieces are becoming more automated as technology evolves. Some self-service triggers during the application process are where screening tools have really improved to help us to deter fraudulent applicants.”

By increasing the sophistication of screening methods, operators are mitigating risk, providing better experiences for prospects and reducing the strain on hardworking associates. As a look ahead to the 2022 Apartmentalize session, “To the Next Level: Upping Your Resident Screening Game,” here are some of the ways screening innovations are helping multifamily teams and how they could continue to evolve. 

Optimized verification methods—but ID first

Synthetic ID—in which someone uses pieces of real and fabricated information to create an identity—is on the rise. Well aware of this trend and other potential identity scams, Morgan Properties makes automated ID verification the first step of the application process. This requires prospects to take a selfie-style photo from several different angles, and Morgan’s screening solution uses facial recognition software to match the photos to the prospect’s actual ID. 

“We’re aiming to combat fraud from the get-go,” says Weissberger, who will be one of the panelists in the “Upping Your Resident Screening Game” session. 

She notes that Morgan Properties deters identity fraud at the beginning of the leasing application and then deters income fraud later on as part of the screening process. “What we’re trying to do is deter someone from even starting the application if they’re not who they say they are.”

Automated income verification

If an applicant clears the ID hurdle, Morgan Properties next concentrates on income verification. Approximately 30% to 40% of the time, the company’s income verification software automatically verifies the prospect’s employment, Weissberger says. In other instances, it will require the future residents to verify their pay stubs or bank statements before finalizing the results within the screening application. 

Morgan Properties also uses its screening software to develop different algorithms for risk scores and thresholds based on property types and market needs. But before it even gets to the deeper reaches of the application process, prospects must do their part to verify ID, employment or bank account information. 

“This process helps put the responsibility of verification on the applicant to go through the qualifying process, as opposed to the site team trying to chase down pay stubs, copies of IDs and other needed documentation,” Weissberger says. “It results in the applicant moving through the process in more of a self-service fashion.”

An optimized system fosters more consistent screening procedures, Weissberger says, as each applicant is evaluated based on the same parameters, and approval or denial of documentation is not subjective. It also ensures compliance with mandates such as Fair Housing. For well-intentioned prospects, the optimized system helps move the application process along more quickly and provides more rapid answers.

While the apartment industry is no stranger to brisk spells of demand, the current housing demand combined with lack of new housing supply is leading to an exceptional volume of applications. While the high demand is good, it challenges property teams to effectively evaluate the influx of applications and determine potentially suitable residents.

Advanced screening measures become even more valuable when several applicants look very similar on paper. Automated income verification is among the tools that can help a community determine the best-qualified prospects among large pools of comparable applicants.

“In the past, the income verification process required associates to do a lot of work and make a lot of phone calls,” says Chris Ramos, Director of Product Management for Experian, and moderator of the Apartmentalize screening session.

“Automated verification eliminates manual steps, results in a more accurate screening process and reduces friction for all involved," Ramos adds.”

Positive rental history reporting among future trends

Another screening measure immensely valuable to rental-housing operators is a prospect’s rental payment history.

“When you think about the most predictive indicator of an applicant, it’s someone’s rent payment history,” Ramos says. “But for the most part, that information hasn't always been incorporated into the lease application. Using it is a powerful way to create a more comprehensive and more informative screening process.”

While rental payment history can provide further clarity for operators, it can be utilized for more than uncovering potentially delinquent renters. Renters who pay on time and in full often don’t receive credit for it as they would for making a monthly mortgage payment. This has prompted some forward-thinking operators to report positive payment histories to credit bureaus. 

By sharing these histories with screening databases and credit bureaus, property managers are helping the industry in multiple ways: They're making it easier for communities to identify quality renters during the screening process, and they're also improving the financial well-being of residents by building their credit histories.

“We really haven’t seen a lot of companies in our industry offer this type of incentive to residents until recently,” Weissberger says. “It benefits us because they are paying rent on time, and it benefits residents because they are improving and building their credit. Down the line, if they want to purchase a home, it should help with their ability to get approved for a mortgage loan.” 

The future of rental application screening

Looking ahead, Ramos believes apartment screening could evolve much like the modern mortgage evaluation process, in which automation will extract advanced data points to help make a qualifying determination. 

“Decision-making will become more complex, as it was very binary in the past based on a credit threshold,” Ramos says. “Now you’re seeing other data like renter risk scores and payment histories that can offset that credit score. Maybe a renter doesn't have a lengthy credit history, but they have more than enough income or possess assets that can help bolster their rental application.” 

But while screening is growing more comprehensive, modern solutions are making the process more efficient for operators and residents, Ramos adds.

"We have truly entered an era in which technology is reducing friction, doing away with manual processes and ensuring Fair Housing compliance," he says. "At the same time, it's giving operators a more holistic and accurate view of applicants than ever before."

Paul Willis is a Content Manager for LinnellTaylor Marketing. 

Want to Hear More?

The “To the Next Level: Upping Your Resident Screening Game” session will take place from 2:15 p.m. to 3 p.m. on Friday, June 24, at Apartmentalize in San Diego. Amy Weissberger, Senior Vice President of Corporate Strategy at Morgan Properties, and Nikki Chambers, Director of Systems and Training at Hanover Co., will be the panelists. Chris Ramos, Director of Product Management for Experian, will moderate.