7 Savvy Practices for More Efficient Resident Screening
- Mar 18, 2008
By Michael LapsleyResident screening has long been one of the most critical aspects of multifamily property operations. Over the last several years, this industry has gone through significant changes. Processes once completed with phone calls and on-site visits are now accomplished online. Data that was once locked in individual property sites–or maintained in separate offices by town, county or state–is becoming increasingly centralized. Slow communications have given way to accelerated data transmission speeds, expanded bandwidth and efficient Web-based applications.At the property level, managers are finding ways to access the available information flow– from the Internet, public records and private databases–to screen residents, identify potential losses and manage risk. What are some of the most effective ways property managers can apply new technologies and data standards to their advantage? How can you immediately improve your screening procedures and the overall bottom-line performance of your properties?We’ve boiled it down to the following seven savvy practices for more efficient and effective resident screening. 1. Integrate Your Information SourcesToday, effective property management is all about information integration – centralized databases under a single architecture used for multiple purposes, from initial screening to property management and performance assessment. Currently, organizations are adopting several system integration methods that will eventually become standard operating procedure. Property managers can now move data seamlessly and with the push of a button from the property management system to the resident screening system. They can also complete a lease form or other document by pushing information from the resident screening system to a forms manager. Residents can even pre-approve themselves on-line for an apartment, without visiting a property, via Internet property listing sites.Integrating information sources using a secure Web-based platform offers considerable advantages, including:• Reduced workload for on-site staff;• Fewer errors with reduced manual data entry; and• Improved data quality and consistency across multiple properties, offices and systems.2. Put Complete Data Sets to WorkIn the past, screening criteria was set and maintained based on anecdotal evidence or subjective experience. Now, better aggregate data sets enable sophisticated analytics that support better business decisions:• Model confirmation: Are you screening for the right things, at the right levels? Aggregate data allows comparing your model to real data on favorable and problematic renter performance regarding debt, skips and other issues. By analyzing resulting performance, you may find that certain properties, with higher loss levels, would benefit with adjustments such as stricter decision criteria or higher security deposit levels. Conversely, your analysis might suggest that the bar has been set too high, and that your screening levels are rejecting candidates who represent an acceptable risk, costing you valuable rental revenue and increasing your marketing and leasing costs.• Identify trouble spots: Are your properties performing to expectations? Property managers can pull a segment of the portfolio data and run it against the screening data to find areas that require immediate attention or further investigation. Potential data overlays include locations, property type, staff and resident demographics. The resulting analysis may provide important clues on how to adjust advertising, marketing and/or staff procedures to attract the appropriate resident.• Fixing the “holes:” Are you missing significant criteria?Is resident behavior inconsistent with your expectations from screening procedures? If so, look for gaps in the screening itself. Credit reports may be appropriate, but you may need to replace or enhance your residency verification with an eviction-history search. Or use a national or multi-state criminal database search instead of just a single state criminal database search. Careful data analysis can identify missing pieces to find better residents. As always, keep in mind that data worth pursuing in one property/location may not be worth the cost in others; testing and analysis will give you the answers.3. Look Beyond Credit ReportsFor years, credit information and manual applicant data verification was the main and sometimes only screening criteria available. Now, growing inter- and intra-state databases supplement credit screening with eviction, criminal and even employment history. Many applicants with marginal or no credit history prove to be excellent residents. Others with additional factors, such as a criminal record, should be immediately flagged. Over the last decade, there have been important gains in the following three areas:• Criminal records: Tracking criminal records (if done at all) was labor-intensive and expensive. In the last few years, private companies have compiled criminal data into multi-state records that produce results in just seconds. While the current state of criminal data is similar to what credit data was twenty years ago, advances including the Internet and high-volume databases will rapidly close the gap in data quality.• Eviction data: Residency verification has been slow and error-prone given the difficulty in confirming legitimate landlord contact information. When an authentic landlord is reached, the desire to have a difficult resident move on or concerns about communicating negative information are powerful incentives for inaccurate data. Fortunately, quick and inexpensive eviction data is emerging with a more objective assessment of behavior.• Employment verification: The newest addition to screening data, employment databases now capture as many as 33 percent of the nation’s employees, providing an economical way to verify income, length of employment and current employment status. 4. Apply Centralized ControlTraditionally, resident screening has been a site-by-site process often lacking in effective corporate oversight. Today, centralized data enables greater corporate control and real-time visibility into leasing office procedures, allowing organizations to: • Monitor offices in real time: Through an integrated Web-based architecture, headquarters can actually “see” which sites are fulfilling processing and screening requirements for each prospective resident.• Review compliance at every office: Even the best screening criteria can be severely undermined by non-compliance – by employees who either fail to perform the necessary screening or allow overrides contrary to corporate policy. Centralized datasets allow headquarters to instantly view leasing office behavior across all properties.• Examine cancellation rates: The same data overlays can reveal important insights from the other side of the coin: Why did qualified applicants walk away? Comparing screening profiles with cancellations may provide clues regarding property expectations and leasing terms that are important to highly desirable residents.5. Streamline Training, Education and SupportTraining geographically dispersed groups is daunting and expensive. Consequently, it’s often sporadically organized and inconsistently implemented. Web-based learning offers group and individual education in inexpensive, convenient 30-45 minute increments. As on-site staff is hired, they can participate in new or pre-recorded sessions as needed. 6. Recognize Different Risk LevelsIn the past, screening typically resulted in a simple “yes” or “no” response. Now, data allows more sophisticated applicant quality and renting options tailored to risk levels and resident performance. Properly constructed, these programs attract and reward renters who have choices, while mitigating exposure to starter renters. Using predetermined parameters, the screening program can instantly make recommendations based on the resulting data. Market conditions will dictate the
level of incentives required and compliance with Fair Housing standards can be automated. 7. Pull It All Together Remember, the whole is greater than the sum of the parts and advanced screening practices can dramatically improve property performance. Today, better data and new technology tools deliver more sophisticated data analysis and help property managers and leasing officers make important business decisions with much greater confidence. This is a win-win for everyone–renters, leasing offices and property owners.For renters, even as data becomes more accessible, access itself is becoming more secure to protect confidentiality. Current regulations, for example, require resident screeners to hire third-party investigators to confirm the identity of property owners–by literally inspecting the properties and their offices–before releasing sensitive applicant data.For leasing offices, enhanced data access significantly speeds screening. Integrated databases and Web-based automation technology dramatically cuts the volume of manual interactions, reducing errors, saving time and freeing employees for more productive work.For property owners, the nature of resident screening has changed dramatically. It’s no longer just another time- and resource-consuming process–it’s a powerful tool that can be actively measured for performance. By comparing screening data with resident performance records, property owners gain important insights into their daily operations, business procedures and marketing programs.Michael J. Lapsley is president and CEO of RentGrow Inc. (www.rentgrow.com), a national provider of resident screening services to the multifamily industry.