Screening With Tech: What You Need to Know
- May 30, 2019
Finding the right residents for a community is a complex, critical part of operating a multifamily community, and it is vital to the long-term success of a property. Looking into a potential resident’s background is not as simple as running a credit check. Effective screening can play a pivotal role in risk mitigation by ensuring leases are only signed with qualified tenants.
Yardi recently partnered with Equifax to enhance ScreeningWorks Pro, the company’s resident screening platform, and enable property managers to quickly verify a prospective renter’s employment and income details. Patrick Hennessey, Yardi’s vice president of resident screening, and Tyler Sawyer, vice president of rental and real estate with Equifax, discuss how tech can lead to more efficient and effective screening processes.
What is the biggest challenge for effectively screening potential residents today?
Sawyer: Data is vital for a landlord or property owner looking to identify the right resident. From a credit-reporting standpoint, we work to alleviate any perceived challenges by ensuring these parties have access to the best data, regardless of whether a potential renter has a robust credit file or is categorized as having thin credit or no credit. Without robust data insight, potentially strong tenant candidates can be left paying higher deposits, needing co-signers or being rejected altogether.
Hennessey: Helping our clients overcome the challenges of effectively screening applicants is our business. Getting that right for both the applicant and the property is critical. A trend we’re seeing is the desire by landlords to make good decisions as quickly as possible—in near real time, if they can. For screening companies, this requires ensuring we can rely on the sources that provide us with consumer data. It means finding reasonable and reliable ways to do our job both effectively and efficiently.
How has resident screening evolved over the past few years?
Sawyer: Automation has become more prevalent in resident screening, with modeling of certain consumer credit attributes to assist with decision making. This should continue to evolve and become an increasingly powerful tool for decision makers. There is also a stronger environment for integrating technologies to allow smaller screening companies to integrate results into larger property management software to help streamline the full property management lifecycle.
Hennessey: Evolving solutions include international credit data, up-to-date employment and income information, identity authentication solutions and robust rental history data to help property managers make the most informed decisions about applicants on a larger scale and more quickly than ever before.
What are some lesser-known ways that screening can mitigate risks for investors and property managers?
Hennessey: Capitalizing on new data sets and technologies can help decision makers evaluate their risks. Technology and data are constantly evolving, but the screening industry as a whole—property managers, owners and applicants—all stand to benefit as access to data and technology merge and become more commonplace across the industry.
Sawyer: Our research shows that an applicant’s current employment and income information is important for property managers to consider. In many cases, the process to verify such information is still slow, at times taking over a week to complete. Utilizing emerging technologies and third-party verification resources can help property managers quickly verify such information.
How have data protection regulations affected the ability of property managers to verify information provided by, or about, potential residents?
Sawyer: Regulators play an important role at both the government and organization level to ensure appropriate data is being used to make decisions. Equifax takes the role of trusted data steward seriously and has developed processes regarding the security, protection and acceptable use of consumer information.
Hennessey: Screening services providers not only rely on trusted data stewards but also on their own policies and procedures to assure that data is reportable, accurate and complete. Data protection regulations are important to all consumers.
What impact can the need for instant data have on the accuracy of information?
Sawyer: This is a great question and one that becomes more important as landlords and property management companies look to make faster decisions. Fast decisions still need to be well informed, because turning away a qualified tenant or renting to someone who is unqualified can adversely affect a rental property’s legitimate business goals and objectives and even negatively impact existing tenants.
I think we are in the midst of a positive evolution right now. For example, our Rental Score solutions leverage communications and utilities data to help give decision makers a more complete picture of their applicants. Automated, verifiable income and immediate, reliable employment verification are all evolving to replace the antiquated processes of the past. The additional insights these evolving solutions provide must be carefully vetted for accuracy and completeness, of course, but we see these evolving solutions as helping to improve the accuracy of the data relied on by decision makers. Finding consistent, well-structured ways to adopt these evolving solutions will become key to enhancing swift and accurate decision making.
Hennessey: There is no question that the demand for faster access to reliable data has been growing and will continue to grow. But the credit bureaus, other data furnishers and screening services providers have an important obligation to ensure that increases in speed do not come at the expense of accuracy or completeness.
Indeed, it is one of our most important obligations, and one that we take very seriously. We are definitely seeing a shift among property managers toward making leasing decisions and executing leases in near real time for the most qualified applicants, but the screening services we provide are not becoming faster at the expense of our accuracy obligations. If anything, the demands of the industry are driving innovation, and innovation is good for all industries, including ours.
What role can tenant screening processes play after a lease is signed?
Hennessey: In the tenant screening services space where we operate, although some customers use screening services to ensure tenants remain qualified, most rely on our services only at the outset, so there is a natural drop off after a lease is signed.
Sawyer: Interaction and tenant communication should never stop. First, as the applicant shifts to a paying customer, on-time or late (positive and negative) rental payments should be tracked. It is recommended that this payment information be sent to the credit bureaus for use in their credit models. This will help with more informed, faster decisions down the road as the individual looks to move into another rental property or even applies for a mortgage. Property management companies and landlords should regularly review their portfolio to ensure that they know their tenants.