Tenant Screening: Good or Bad?
New types of tenant screening software apps might be solving a key need for landlords and property managers, yet may actually be the undoing of tenant screening software in general.
Legal battles might be brewing regarding software-based tenant screening services across the world. The advancing capabilities of these Big Data/AI applicant verification tools is that they might be learning too much about prospective tenants — and regulators will be watching.
Although controversial, these tenant screening tools have many positive benefits including improving cash flow, reducing tenant turnover and late paying tenants, and may actually help deter renter discrimination.
Certn Tenant Screening Software
A new tenant screening service from Vancouver Canada based Certn is reported to be creating a 40% increase in renter approvals, reducing evictions, and ensuring better cash flow.
Certn’s claim, is that more detailed, thorough, and predictive tenant insight improves property management results and helps more renters get through tenant screening procedures successfully. Sound too good to be true?
Certn uses a 3-dimensional approach to scoring applicants. By using social, behavioural and financial profiles our platform provides a deep quantitative understanding of an applicant’s character — from the Certn Website
How Does Certn Do It?
Certn describes its services this way:
Social Scans peruse available public social profiles, email addresses, mailing information, social media profiles and known aliases. Public Information scans find risk-relevant public information and adverse media from over 100,000 sources worldwide. And criminal and court Data scans scour available public civil and criminal cases including warrants from 240 countries in 77 languages.
We may think of tenant screening software as a tool to discover negative information about a tenant that would help landlords and property managers to screen out poor quality or high risk tenants. The question arises about a social media user’s posts which may be published for an employer, not necessarily themselves, and used against them. Could a post, instagram, or tweet with some negative or strong words in it, create a negative response in the software?
some prospective tenants are talented actors and smooth talkers
If you’re a property manager or landlord, or a co-op association manager, you might think is all just smart business. Your goal is a high quality tenant who will not create friction or damage and pay on time. In that light, in-depth screening tools are vital to protect your cashflow and investment.
Are Predictive Analytics Tools Fair and Beneficial?
For property investors and managers, having a screening service that can protect you from devastating cash flow loss and property damage is important.
You’ll see the word “predictive” being used a lot these days by digital business proponents. Business is jumping on the artificial intelligence bandwagon however it is just a software product and all we have are their claims of efficacy. Yet, there is a definite need for high quality, accurate tenant screening. The benefits are clear.
Top Benefits of Tenant Screening Services
- better prediction of eviction possibility
- reduced possibility of cash flow disruption or financial failure
- quick, responsive source of verification
- useful insights into factors that may be important for your property (party animal wants to rent your beautiful house loaded with new appliances, furniture, flooring, and delicate features)
- inexpensive alternative to do it yourself checking
- more accurate than interviews and paper based trails
- full credit, criminal, and eviction background checking
- some insight into the personal behavior and background of the tenant (as opposed to a short personal interview — landlords are not psychologists)
- accurate verification of renter’s identity
- overcomes the limits of references and past history
On the other side of the issues are governments and tenant rights groups who are concerned more about their right to live somewhere and maintain their privacy. And any tenants are concerned about private information they can’t view, preventing them from renting an apartment or leasing a house or condo.
Cert’s value proposition states: We help property managers and financial institutions identify, assess, and manage applications to find the best customers
Yet, how they’re screening rental applicants might surprise some.
As part of its process, Certn combs social media posts and other material to gain better insight into the personal behavior of applicants using predictive behavior models. But are they accurate predictors?
Then you have the issue of how much information is acceptable to collect, is accurate, and whether it should be legally permissable to use it. The quality of the information and resulting assumptions may draw the ire of some tenant groups.
Please do Share this post on the Tenant Screening controversy in Linkedin and Facebook
This video discusses some relevant issues in how landlords choose software and the pitfalls of cheap automated services.
Please Note: ManageCasa is not associated with RentPrep and this is not an endorsement of their services.
And the question of whether this gathering and processing should be automated without human scrutiny, and use social media information are issues we’re all struggling with.
“It’s very hard to see how information that is disclosed on Facebook, Instagram or Twitter would be related to a tenant suitability decision,” said Acting Deputy B.C. Privacy Commissioner Bradley Weldon. “If you are collecting more information than is necessary, which would almost certainly include information that is in a social media platform . . . then you are likely in contravention of PIPPA” — from a CTV report.
Certn states in an interview that they’ve reduced renter defaults by up to 75% which is a huge benefit for landlords or property managers and investors.
Complicating the issue and how it’s approached is that each country, and its provinces and states have different views on privacy and data collection. In cities/regions with rent controls and high regulatory regimines, the opposition to detailed investigative reports might be strong too.
Artificial Intelligence Driven Screening
CLAIRE is Certn’s artificial intelligence process. It Powers their adaptive analytics pipeline, continuously gathering data and learning from past experiences (what is available) — from the Certn website
A good number of tenant screening and verification software services exist already, but landlords might be questioning the validity and accuracy of their reports.
Landlords and property managers might ask whether any report is valid without going into some detail about the applicant. And what does the phrase “background check” actually mean?
Tenants Increasingly Required to Provide their Own Verification
Many rental applicants across the US and Canada are now required to pay for and provide their own verification and background report. And for renters who may not have a good credit record or who are self-employed, a positive verification report might give them a chance to acquire a rental, in an era of very low availability.
Many current landlords don’t use verification services and instead base their decision about a renter applicant from a personal interview and checking them out online. That in itself might be considered illegal in future. Could landlords and property managers be required to prove they conducted screening of tenant applicants legally?
The issue of discrimination is at play, but does the screening software actually remove the racial, cultural, age, and other issues that plague some renters now?
Only the courts in each state/province/country will determine whether this type of tenant screening reporting discriminates or helps improve the rental housing market. Who is considered a bad or high risk tenant might not be a decision of the landlord or property owner, but rather a politically driven matter that keeps discrimination in check.
Are you concerned with the use of automated software, artificial intelligence, social media and other criteria used in tenant screening? Have you used a tenant screening service? Where do you stand on this issue?
See also: Property Management Software | Apartments for Rent | Renters Insurance | US Rental Housing Market Forecast | Buy or Rent in 2018? | US Apartment Rental Prices 2018 | Best Cities to Buy Rental Property | Texas Rental Housing| Reduce Tenant Turnover | Property Management Software | How to Screen Tenants | How to Raise Rent for Landlords and Property Managers | Improve Rental Property Cash Flow | Property Management Business | Tax Savings for Property Managers | Real Estate Portfolio Tips | Property Management Startup Tips | How to Use SaaS Property Software | ManageCasa Cloud Based Property Software