Applicant References
Applicant References
Even though the most important tenant screening tasks are credit reports, criminal records, and eviction records, references can also be of value in evaluating applicants as potential tenants. The primary reason why references can be useful is the fact that, while an applicant has a good credit rating and there appears to be no criminal record or evictions in the jurisdictions checked, there is no guarantee that an applicant will be a good tenant. References can provide information regarding an applicant’s character.
There are basically two different types of references of potential interest to the landlord. One is from previous landlords and the other is from those who know the applicant personally.
Previous Landlords
Most experienced landlords recommend asking the applicant to provide rental history for the past three years. Usually that will provide one or two previous landlord references in addition to the current landlord reference. Going back farther than three years may be counter-productive in that records are unavailable or contact personnel are no longer there.
Some landlords will be forthcoming about giving out information while some will be reluctant to provide any information other than tenant name, residency dates, and monthly rent. Their reluctance to share information is not necessarily a negative response to the tenant or an unfriendly behavior. Some people like to talk more than others do.
Some current landlords may be upset enough with the tenant to say nothing bad about them to allow them to move to your vacant property. For this reason, you should contact the applicant’s landlord prior to the current one rather than depending solely on a current referral.
What you are trying to find out is whether the applicant paid the rent on time, kept the rental property in good condition, was considered a good neighbor, and otherwise materially adhered to the lease agreement. In short, from his past rental behavior, can you determine if the applicant is likely to be a future good tenant?
Limited Rental Histories
There are many potential applicants who have limited rental history, no recent rental history, or no previous rental history at all. Refusing to consider such applicants may significantly reduce the pool of available applicants. This is particularly true in certain locations and/or under certain economic conditions.
There can be many good potential tenants among the following three categories of applicants for which the landlord cannot obtain information from previous landlords:
(1) Those that have never lived in rental housing,
(2) Those who have resided in rental housing, but not as lease signing tenants in recent years, and
(3) Those that have been homeowners for quite a while, but are returning to rental housing, either by choice or necessity.
Category 1 includes those who have only recently left the nest. These potential applicants not only have no rental history, but they also often have little or no credit history. College students and first-time job holders are often in this category.
Category 2 includes those who were spouses or roommates, but have not themselves signed a lease agreement.
Category 3 includes those who have just sold a home and need to rent for a period of time until they find a replacement property or have one constructed, as well as those who have lost their homes due to the current housing market collapse or through some other financial catastrophe. Those who were unable to meet mortgage, property tax, and insurance costs may easily be able to meet the expense of monthly rent.
For applicants in any of the three categories, landlords must sometimes consider utilizing personal references as a qualification tool.
Personal References
Personal references differ from landlord references in that that a personal reference will be an individual that has never rented to the applicant. Personal references are character references offered by family, friends, business associates, community leaders, etc, who can personally vouch for the applicant.
Some landlords feel that such references are worthless, since most applicants are not likely to provide the name of someone who would give a bad reference. The fact that information obtained from personal references can be difficult to quantify and assess in measurable terms also leads some landlords to use this source of information sparingly.
Other landlords view personal references as a third party opinion, and while acknowledging the potential for bias, recognize that behavior observed over a period of time is indicative of future behavior, much as the applicant’s credit history reflects future credit management.
Most landlords who utilize personal references prefer to use hard data to evaluate candidates and “soft” information obtained from references only as a tie breaker for equally qualified applicants.
In spite of the suspect value or difficulty of using personal references, landlords should realize that, properly used, personal references can be a helpful screening tool and in some situations may be necessary.
Obviously, landlords must understand the differing values of reference sources. A parent’s reference may be of little value unless the parent is willing to provide a financial guaranty for the child’s lease, with a guaranty usually eliminating the need for qualifying the child. A reference from a pastor, priest, rabbi or other religious leader or from a former teacher, counselor, coach, scout leader, or employer who has long-term knowledge of an applicant’s character can be meaningful.
Landlords must also use care in selective use of this screening tool so as to avoid discrimination claims. It is important that the tool be used based on lack of credit or rental history, that is, financial or behavioral issues, not because of any characteristic that is prohibited by fair housing laws. However, if you understand and follow fair housing laws you shouldn’t be afraid to exercise your right to adequately screen applicants.
Checking References
References are of little or no value unless the landlord puts some effort into checking them. There is also a benefit to contacting personal references in that certain information supplied by the applicant on his rental application can be cross-checked with the reference. This allows the landlord to help determine the truthfulness of the applicant’s statements and also to ferret out false references that would aid the applicant in trying to fool the landlord.
Landlords should also make some effort to verify the identity of references and confirm that phone numbers or other contact information provided is those of the purported reference.
It is important to schedule interviews for a time when both you and the reference will have sufficient opportunity to communicate. Listening skills are critical since some answers may require clarification before proceeding to the next question.
As with interviews of previous landlords, it is a good idea to use a prepared script in conducting reference interviews. It allows accomplishment of the task in a professional and efficient manner, and ensures all questions are asked of each reference of each applicant. The reference’s responses to questions should also be recorded.
Some Possible Questions
In what capacity does the reference know the applicant? Is he a relative, friend, teacher, etc? A reference from someone who is a relative or friend is less valuable than one who has dealt with the applicant on a business level or in some other capacity.
How long have the reference known the applicant? References usually carry more weight the longer the reference has known the applicant. However, recent knowledge is also important because people can change over the long term.
The value of a reference is greater when you are provided a detailed and believable context for his opinion of the applicant instead of only a generalized statement. The value of a reference also depends on whether or not you heard similar things from each reference you checked, but either way, the reference check will have provided valuable information.
Screening Services
Most screening firms will not contact references. Even those that claim to confirm employment may in reality only look at employment information that appears on a credit report. The business model of screening services does not allow for the time required and the cost of adequately checking references. Additionally, checking references is a subjective task that does not fit the mathematical models used by most firms.