How To Deal With Multiple Offers From Tenants

You just listed your rental property, and within hours, you’re flooded with calls and emails from eager applicants. Having multiple applicants competing for the same property is a dream for most landlords, but how do you choose the most qualified applicant from a pile of applications?

The goal is to find an applicant who meets all of the requirements of your rental policy, but it must be in accordance with Fair Housing laws. Depending on where you live, there could be additional laws that affect how you handle rental applications.

Read on to learn more about how to deal with multiple offers from tenants.

How To Choose Between Multiple Rental Applications

Receiving multiple rental applications for a rental may seem like a good problem to have, but it can be a big headache for property managers. Landlords and property managers can choose the most qualified tenant from the list of applicants, but they must be careful to follow local laws and Fair Housing Act regulations. The Fair Housing Act prohibits discrimination based on race or color, religion, sex, national origin, familial status or disability.

Here is a list of steps for property managers to follow when choosing between multiple rental applications: 

1. Review rental application laws: There are laws in place to protect landlords and tenants during the application process, and landlords must educate themselves on the legalities of vetting prospective tenants. Violating the Fair Housing Act comes with significant financial and legal penalties. You could pay up to $16,000 for the first violation or $65,000 if two or more violations have occurred within a 7-year period. Even if you didn’t discriminate intentionally, the law could still find you noncompliant.
2. Review applications in order: You don’t have to review rental applications in order, but it’s a good way to ensure that you treat all applicants fairly. If you accept an application out of order, you could be accused of discrimination. If you find information in the first rental application that disqualifies them, move on to the second application you received. Keep documents of your decision-making process that proves you used the same policy for all applications.
3. Use a consistent tenant screening process: Use the same process for each rental application. If you deny an application, you should be able to prove that it was based on your application policy. Having a set process can not only help you avoid possible discrimination accusations, but it allows you to find an applicant who has a positive rental history and will pay their rent on time.

Factors To Consider When Screening Tenants

Below are additional factors to consider when choosing a tenant and renting out a house:

• Credit history and credit score: Landlords use credit checks to access an applicant’s ability to pay rent on time. Landlords are more likely to rent a unit to someone who has a higher credit score and a record of making on-time payments. A higher credit score and a history of timely payments often indicate financial stability.
• Criminal history: You can run a criminal background check with written consent from the applicant, but specific laws vary from state to state. Running a background check allows you to identify potential red flags and avoid problems. Make sure to review your state’s laws about what type of charges allow you to disqualify applicants.
• Employment history: Landlords typically check employment history as part of the tenant screening process. Stable employment shows consistency, reliability and the ability to pay rent every month.
• Monthly income: Request proof of income – pay stubs, tax returns or bank statements – to verify that the prospective tenant can afford to pay the monthly rent. There are several ways to determine the minimum income required to qualify, but the standard is the 30% rule. In other words, no more than 30% of the applicant’s monthly income should go toward rent.
• Rental history: Reach out to previous landlords listed on the application to get a better understanding of the applicant. By researching rental history, you can determine whether the applicant is trustworthy, responsible and financially stable. If the previous landlord says they were always late on rent, never kept their word or left the unit a mess, they may not be the best candidate.

Multiple Rental Applications FAQs

Here are the most frequently asked questions on how to deal with multiple offers from tenants.

Can a landlord accept multiple applications?

Landlords can legally accept multiple applications for a single unit. Landlords and property managers have the right to choose the most qualified applicant based on their application policy. Many landlords go through applications on a first-come, first-serve basis, but it’s not required.

How do I deny a rental application?

Federal law requires landlords who reject a tenant application due to information found in a tenant screening report to inform them of that fact. This is called an adverse action, and it must be given in writing, orally or electronically. You must also provide the information of the company that provided the report, notify the applicant of their right to a free copy of the report and their right to dispute any inaccurate information.

The Bottom Line: Be Fair And Carefully Screen Prospective Tenants When Dealing With Multiple Offers

Property managers and landlords have the ability and resources to choose the right tenant from multiple applications. However, it must be in accordance with state and federal laws. There could be legal and financial consequences if the law finds you noncompliant.

Have a standard process when screening multiple applicants and keep all documentation proving this fact. If you find information during the screening process that disqualifies the applicant, make sure to notify them in writing, orally or electronically. If you’re thinking about investing in real estate be sure to find a rental property in an area that will attract multiple rental applicants.