Why does no one expose the rental industry's stranglehold on Americans?

[grasswire]

I haven't had to apply for a rental for a number of years.

So when I am going through the process now, I see a horrible, horrible process that should be illegal. It's humiliating, it seems to be a sort of bait and switch, and the effect on people of modest means is a sort of nasty roulette.

So you find a townhouse you like and want. You are handed pages of "screening criteria" and application forms. If you want to apply, you pay $45 or so for a fee. They process your information and THEN, they adjust your deposit based on what they find. There is no fixed deposit until they decide what your info means as a risk to them. So, for example, your deposit might be anywhere from $400-$1400 for the townhouse I saw today.

But you won't know if you are going to have to pay $1400 until you have shelled out the screening fee.

That's just the tip of the iceberg.

Why is this process so intrusive, and humiliating to people? Is the risk to a property owner that great, truly? Or have "property management firms" just found a way to monetize transactions?

[EC]

1. Likely something to do with insurance and liabilities. n/t

[grasswire]

3. I fear you are way too generous.

You've seen how virtually every industry sucks the bones of the working people. They found a way to extort money.

[JDPriestly]

12. What makes you think it has to do with insurance and liabilities?

I suspect it has to do with whether the prospective landlord thinks you will walk out on your lease and have to be sued to pay up and what damage you might do to the premises you rent.

[Orrex]

2. Why do employers run credit checks on prospective employees?

To screw them, that's why.

More specifically, it's to give the employers an excuse not to hire someone. In fact, I have yet to hear of a single job in the US where one's credit score is truly a meaningful predictor of value or honesty. That includes such positions as "cashier" and "banker" and "loan officer," to name just a few.


But to answer your question, the property owner might screen 10 or 20 applicants before accepting someone. That's $450 to $900 worth of free money for the owner, on top of the security deposit that they'll get in due course.

[grasswire]

6. it oughta be regulated.

does anyone ever look to see if they actually DID screen all those peeps? Or do they just collect deposits and pick one application randomly. It's a racket.

[999998th word]

38. What [s]he said.

[pnwmom]

4. I'm not excusing their system, but the reason I've heard

is that, if the person turns out to be a deadbeat and has to be evicted, it can take several months and an involved legal procedure to get them out.

So if someone appears to be a high risk, they want more upfront to compensate for that.

[grasswire]

8. but they are screening for deadbeats

So why should they extract extra hundreds of dollars in deposit from the person they have apparently decided is not the deadbeat?

[Orrex]

11. 100% correct

In essence, they're charging you a fee to prove that you're a good risk.

If they were remotely honest about it, they would apply that fee as a credit toward your security deposit or first month's rent or whatever. Instead, they're telling you that the penalty for being honest is a $45 fine and maybe no place to rent, while the penalty for being dishonest is a $45 fine and maybe no place to rent.

[aikoaiko]

60. Actually, I do apply the credit check fee toward the first months rent.

and many lessors do.

[Orrex]

66. News to me.

None of the ones I've checked will do so. I'm pleased to learn that others to, but it hasn't been my experience.

[Horse with no Name]

5. I looked at a house recently

they didn't allow smoking (no problem, I don't smoke), you couldn't hang anything on the walls, you were responsible for all repairs, they wanted 1st and last months rent for a deposit, a $500 deposit for a pet...which was non-refundable (on top of the other deposit).

Rent was due on the first. Late charges and administrative fees accrue immediately.
Landlord comes around on the 1st of the month. Will also inspect house at that time...each month.

I couldn't get out of there fast enough.

But, are you ready for this? It was for a trailer.

[pnwmom]

7. Wow. n/t

[grasswire]

10. yes, the worse the place is, the more strident they are

Lots of NO NO NO!!! No this, no that.

[glinda]

9. Because it would expose the fact that the wealthy have figured out a

new scam after people have been thrown out of their homes.
Worse than that even is hearing an "investor" on NPR raving advice that renting is the way to go! hahahahaha!

[jtuck004]

13. People who make less than $30,000 a year pay, on average, about $3000

MORE in fees by banks, landlords, stores, payday loans places, tax prep stores, etc., than do people who make more than that,
according to the book Broke, U.S.A.


This is such a fee.

[devils chaplain]

87. It's expensive to be poor. N/T

[whoneedstickets]

14. I rent out a house, it can be a nightmare.

We upsized for family reasons and decided to rent rather than sell our old place.

First renter we had, seemed really nice. Stopped paying after 4 months. I asked her to move out and I would tear up the lease. She refused to go. Cost me $2k in out of pocket legal fees to get the bill of attainder. Lost out on 6 months rent. Total bill 8K+ from my savings.

I learned a lesson. The $45 dollar fee defrays the cost of the credit checks you have to run. Deposits offset some of that cut-and-run potential. Pet fees are insurance against having to tear up the carpets. $500 would barely put a dent in the cost of new carpets in a 1500 square foot house.

Any landlord who doesn't charge these fees is an idiot. Like I was.

[spooky3]

15. I feel for you.

I couldn't sell my house; rented it to "respectable people." Although they paid on time each month, they did over $10K in damages, making it even harder to sell the house later. The security deposit couldn't begin to cover that cost.

[grasswire]

21. did you sue for damages?

That's the lawful remedy.

[spooky3]

37. no--I lived in a different city from the house and it would have cost me more than I

could have recovered.

[whoneedstickets]

57. Can't get blood from a turnip...

I considered suing to recover my losses. Legal costs would have exceeded the recoverable amount -that's if the renter had any assets to get. She didn't.

It only takes one experience like this and a $10K lesson to turn a goodhearted landlord into a cynical, paper-pushing bureaucrat.

[pscot]

81. You're joking, right?

[Horse with no Name]

27. Conversely

Every house I have ever rented (as a tenant) ends up in better condition than when I rented it.

If it needs paint, I paint.

If it needs repaired, I repair it.

I replace faucets. I replace toilet guts. I replace flooring.

I always leave a house better than when I found it.

The people that owned this place said they just had renters move out that had only lived their 3 months and cost them $7500 in damages. But seriously. ALL they have to do is check my references to find out that they are in line for home improvements if I live there, but that is too easy.

[grasswire]

34. the last time I left a rental...

...I even spackled the nail holes in the walls from hanging pictures. I improved the garden space with hundreds of dollars of perennials and bushes. I like taking care of my home, even if it belongs to someone else.

[Orrex]

35. Next time, watch out

If you improve the condition of the apartment, the landlord might raise your rent because you're now renting a better apartment.

[pscot]

80. I had a similar experience

You want to trust people, but it is truely said that no good deed goes unpunished.

[aikoaiko]

16. I rent a 2 bed condo and I think that's a great idea.

I do credit checks and they cost me $25 and I charge $25.

I can see rewarding people with good credit with a lower security deposit, and minimizing my risk with riskier renters by a higher security deposit.

I don't know if I'll do it, but it is a good idea.

[Orrex]

17. Would you attempt to determine the reason for a bad credit score?

Or would you go the same route as employers and simply assume that a bad credit score means that a person is a bad risk, rather than accepting that unprecedented economic factors entirely outside of the individual's control can have a detrimental effect on one's rating?

I don't fault you for wanting to establish the prospective renter's reliability, but a credit score is a clumsy and ill-suited tool for such an analysis.

[grasswire]

20. credit scores are a pox on America

The idea that your credit score is damaged if you pay your bills "too quickly" is proof that the system is based in capricious, ridiculous muck.

[aikoaiko]

23. the credit check provides more than a credit score -- it provides a credit history

You can see the types of debt and what didn't get paid for over several years.

[grasswire]

24. there is no comparable service to protect renters from bad landlords

Why no scoring system for property managers and property owners? Why can't a renter (whose risk is very real) run a check to minimize risk?

[aikoaiko]

31. They can. All they have to do is what the leasor does, require it before signing a contract.

Of course, most leasors won't do it.


And there is the BBB for incorporated leasors.

[Orrex]

33. You're basically saying "they can do it, but they can't do it."

In other words, they can't do it.

[Recursion]

45. Why not?

It's easy. Tell the lessor "I require a credit check of my landlords". They'll either agree to it or not, just like you can agree to their checking your credit or not.

[Orrex]

47. Sure, just like you're "free" to decline to submit to a drug test for a job that requires it.

You can indeed decline, but in so doing you are stating concretely "I don't want this job."

[Recursion]

49. Yep. And if the lessor declines it they are saying "I don't want this renter"

If your complaint is that many markets are lessors' rather than renters' markets, I don't see how that is the fault of credit checks (and, incidentally, many markets are currently renters' markets with so much housing stock empty).

[Orrex]

50. Because a credit check can hurt the renter in a way that it can't hurt the lessor

If the renter submits to the credit check and the result is unfavorable, then it seriously (and very possibly baselessly) harms his ability to obtain a lease. If he refuses the credit check, then he is stating that he doesn't want the lease. It's not the "fault" of the credit check any more than it's the sledgehammer's "fault" when it's used to smash a person of low income.

The renter simply has no leverage by which he can force a lessor to submit to the credit check, because the lessor can simply call out "next!" and a new renter will show up with credit check in hand. You can't honestly claim that the renter is equally "free" to demand a credit check because it's only true in the same way that low income citizens are equally "free" as super-rich citizens to demand an hour of their Congressman's time. On paper, sure they're free to do so. But in reality? No way.


I'll need to see the statistics on these renters' markets you're describing, incidentally, because I've never seen one in my entire life, and certainly not "many" of them, unless we're also including skid row shit-shacks in this calculation. In every single case I've ever seen, the lessors hold all the cards. Sure, some units might stand empty for a while, but the market as a whole greatly favors the lessor.

[Recursion]

52. I've lived in markets where the renter has leverage

The renter simply has no leverage by which he can force a lessor to submit to the credit check, because the lessor can simply call out "next!"

I think you may be extrapolating from your market to the rest of the country; I definitely know areas where the landlords have to jump through all kinds of flaming hoops to attract one of the few renters.

[Orrex]

53. Really? What was the rentl-level for those markets?

And when did that take place?


I've lived in quite a few rental markets in my day, and I've never seen anything to contradict the impression that I've gotten in each one of them. I don't dispute that it's possible that you're correct, but in practical terms I have trouble believing that many markets favor the renter.


Anyway, that's mostly irrelevant. The underlying point is that credit checks are a poor tool for gauging a person's reliability, and the fact that lessors use them more than renters shows that the imprecision of the tool provides a greater benefit to the lessors more than to the renters.

[Recursion]

54. Agreed on the last part

The underlying point is that credit checks are a poor tool for gauging a person's reliability

Yes; the problem here is that there isn't a good tool for a lessor to judge a potential renter's risk.

And to your question, it was pre-gentrification midtown DC.

[grasswire]

55. what is mid-town DC?

I lived there about twenty years ago, and I don't know what "mid-town" refers to.

My experience is the same as that of Orrex. I have never seen a renters' market anywhere in the country at any time. Certainly not now. Rents are higher than they were before our American Recession, and landlords more ferocious and exclusionary.

Honestly, I just pass over the listings where they list all their NO NO NO this NO that in all caps with exclamation marks. Who wants to deal with that kind of folk, anyway?

Cut the paranoid drama, and treat people with respect. That's the way to screen.

[aikoaiko]

58. Grasswire's question to me was:Why can't a renter ...run a check to minimize risk?"

And my answer is that they can require a check of the lessor before entering into the contract. The lessee is not powerless if they are concerned.

I get it that most lessors won't agree to those terms, but that really wasn't the question.

[Orrex]

63. Well then here's the answer to his question:

Answer: The renter can demand to run a credit check on the lessor to minimize risk, as long as the renter accepts that by doing so he's likely forfeiting his chances of getting the lease, even if he wants it.

[Orrex]

26. Right, but it doesn't give the context for that history

In short, it gives only the answer that the would-be creditor wants to derive from it

The creditor should be equally required to open his/her/its credit history for perusal by would-be renters. After all, they deserve to know whether the lessor is reliable and a good risk, too.


All credit defaults are not created equally, nor should they be treated as such.

[aikoaiko]

30. When you see the same stupid debt over and over -- its sure sign to stay away.

One the other hand, other times you see a sudden set of unpaid bills and then a couple of years of good payments, its a sure sign that something bad happened but the renter has moved beyond that.

And, BTW, renters are free to require credit checks of leasors -- good luck with that though.

[Orrex]

32. In other words, renters *aren't* free to require credit checks of lessors

Also, if you contest a debt on your credit check, doesn't it hide that debt in some way? I've never tried this, but a former coworker said that he'd done that trick to qualify for his mortgage, hiding a shitload of credit card debt simply by contesting it.

If this is true, then it further proves the uselessness of credit checks as a tool for rating reliability.

[Recursion]

43. Sure you are

A renter is 100% free to require a credit check from a lessor. Where did you get the idea that they aren't?

[Orrex]

46. You certainly can't be serious.

In order to be truly "free to require" a credit check of the lessor, the renter must have equal power--both legal and practical--to exercise that freedom.

If the renter demands a credit check and the lessor refuses, what will be the result? I'll tell you: nine times out of then, the renter will have to find a new place to rent.


You're equivocating legal freedom versus practical freedom, and you seem to be pretending that only one is a factor here. Hell, a teenage boy is "100% free to require a credit check from" his prospective girlfriend's father, but that doesn't mean that he's free to do so in any real or practical sense.

[Recursion]

48. Similarly, if the lessor requires a credit check and the renter refuses...

... the lessor has to find another renter, which is not easy in every market. Some markets favor the lessor, some the renter.

[Orrex]

51. In practice, the two are hardly the same.

Where are these renter-favoring markets, exactly? And what is the relevant income level that you're describing?

If you mean, for instance, that a small $10,000/month apartment in Manhattan favors the renter, then I have to say that I'm not convinced.

[aikoaiko]

59. I don't think you understand the probabilistic nature of reducing risk.

Of course credit checks are not perfect. Neither are housing reference checks (too many people lie) or even asking for confirmation of work history from an employer (could get fired or laid off tomorrow) is problematic.

One does what one can to gain available information.

[grasswire]

64. so why doesn't someone start an insurance service for owners?

You're a property owner. Would you like to have an insurance policy that covered your damages if you get a bad renter?

There's a money maker.

[Orrex]

65. Might as well read some tea leaves then, too

Because as a measure of personal reliability, that method will give about as accurate a prediction.

[aikoaiko]

67. Past behavior is usually a decent predictor of future behavior.

Not perfect, but good enough.

[Orrex]

70. There's your problem, though.

Credit rating isn't a rating of past behavior. It's a summary of past circumstance, and a poor one at that.

[grasswire]

72. perceptive distinction there nt

[aikoaiko]

74. We'll have to agree to disagree on that point because you can often see the difference

between tough circumstances that are no longer in play, and someone who makes bad financial decisions or is irresponsible.

[Orrex]

77. Fair enough, but in that case...

I think that we're actually agreeing to agree!

I can live with that!

[999998th word]

39. How do you protect yourself from 'renting' a place that is being foreclosed on?

[grasswire]

41. check the county records

that's an excellent point -- see my post below. Renting a home that goes to foreclosure is something no one should have to endure.

[Travis_0004]

18. Whats wrong with charing a higher deposit if somebody has bad credit?

Credit is somebody's risk of defaulting on an obligation. Somebody with great credit is not very likely to default on money owed, so if there is damages, they are likely to pay it at the end of the lease, where somebody with bad credit is likely to default, so a landload wants the money up front. I see nothing wrong with it, and if I owned a property, I would conduct business the say way.

Its not about screwing the little guy, its about protecting me.

[Orrex]

19. If credit ratings were a true measure of one's reliability, then it wouldn't be a problem

Instead, in the world we live in, a credit rating is equally a measure of how badly someone's been victimized by forces utterly out of his control, and it's not always easy to tell one scenario from the other.

Renter Joe might have had spotless credit before getting downsized from his job and subsequently losing his car and his house. So when his credit score takes a nose dive, it's not because Joe is irresponsible; it's because he's gotten screwed.

Contrast that with Renter Sam who simply ran up his credit cards and declared bankruptcy. Sam might have the same credit score as Joe, but there's nothing similar in their behaviors nor their relative reliability.


A credit rating is a true measure of reliability the way an IQ test is a true measure of intelligence.

[grasswire]

22. worse -- it's class warfare n/t

[eilen]

25. I think the report shows the credit history

in that way, a pattern of credit behavior can be determined. So if Joe was a very good creditor, paying everything for years until a situation like job loss occurred-- that can be explained in the application.

At least that is what I got from one of the landlords that posted here.

I know people who have gotten burned very badly from destructive tenants. They felt badly and gave them a chance without getting references. One friend had her property damaged by her own brother whom she did not charge a deposit.

I also sympathize with renters, particularly the new renters. We rented for a very long time. Sometimes it seemed that our landlord was not very responsive (like when our refrigerator died and it took 2 weeks for them to replace it.

[999998th word]

42. It's one more weapon they can use against us.It instills fear and attempts to enforce compliance and

fear.

[msongs]

28. just buy your own house and you won't have to rent. btw credit scores do NOT show up on

a credit check run by a landlord.

[Orrex]

29. Better yet, just be independently wealthy, and you can rent your properties out to other people

BTW, I didn't know that about landlords' credit checks.

Why do they run them, then?

[grasswire]

36. they aren't looking for scores, then, but history

I ran my own credit report last month just to see what would turn up. Gee, there was an old utility bill for $22 from 6 years ago that I didn't even know about. Not much else, as I don't have any debts. My very old very tiny student loan didn't show up.

Another member of my family looks terrible on the credit report despite having rebuilt his career. He lost everything in a bitter divorce, and then couldn't find enough work to even take care of himself. Two years of suffering. Last month he made almost $6000 self-employed, but I'll wager that a property manager would be real snooty with him.

[Recursion]

44. It shows outstanding debts and charge-offs. But not, oddly enough, evictions.

It's basically a way to see if this is somebody who has a history of running out on financial obligations.

[grasswire]

56. I think credit checks are useless

Example: I am in a dispute with Bank of America over the penalties on a debit card -- about $200 that I refused to pay because of their predatory practices. BofA has been forced to settle multi-million dollar class action suits regarding those practices. They closed my account, and apparently charged off those fees.

This did not show on the credit report I pulled on myself.

So apparently it doesn't show everything.

[aikoaiko]

69. imperfect reporting is far from useless infomation.

Its not like a single minor incident causes that much harm to a credit score or presents as a terrible history.

I ask everyone who submits a credit check form and fee with me that that I like to rent to people with a decent credit history, and that they should let me know ahead of time if there is anything they would like to explain. If they have bad credit, 4 out of 5 times they say they have great credit. What I see are credit scores between 350 and 500 with years and years missed bills and outstanding loans. The other 1 out 5 says they might have one or two things outstanding.

[grasswire]

73. what about no credit history?

what do you think of someone who has opted out of the system for a good part of an adult life?

[aikoaiko]

75. Then their history would by fine (even if their FICO score was low).

If they have opted out then their credit history wouldn't show me any irresponsible choices, would it?

[grasswire]

76. some people think opting out is an irresponsible choice

To wit: FICO punishes those who opt out.

[aikoaiko]

78. And they are entitled to their opinion, but that's not my position.

[aikoaiko]

61. Yes, they do when I run them.

[grasswire]

62. so how do you make yours different?

Hm?

[aikoaiko]

68. I don't do anything except file the paperwork with a credit info company.

Perhaps its a state law thing that prevent it from being reported where msongs lives, but I get the FICO score in my report as well the history.

[grasswire]

40. the last landlady in my life pocketed rents and let homes go to auction

She (and her kinfolks in crime) had multiple properties that went to foreclosure because she pocketed all the rent payments for nearly a year and let the properties go to foreclosure, forcing dozens of families to be evicted and lose their deposits and homes. It was a horrible, gut-wrenching, traumatizing experience. In California, this "rent-skimming" is illegal. It ought to be.

Renters, always check to see if the home is in foreclosure before you sign a contract.

[Gormy Cuss]

71. Because there aren't enough renters complaining about it. That's why.

Unless this is the only townhouse in your area, tell them no thanks and be done with it because any landlord with such bizarre, over the top preconditions as a flexible deposit based on some tea leaf reading is going to screw you as a tenant.

[fasttense]

79. About a decade ago we were looking for an apartment to rent and came across the same thing.

There was a nice little house that needed some serious cleaning that we were thinking of renting. The rental company wanted to charge us $75 to apply. This on top of the fact that we had to rent the property as is. That is they were not going to clean it up (and it was awful messy and needed painting) before we moved in. Of course we declined to pay and left. One of the employees there followed us out and told us they would sign us up for free. That the $75 was to keep "certain people" from applying. I wasn't quite sure who those certain people were. But I suspected it was to keep minorities out. We got out of there as fast as we could.

About 50% of the units we were interested in required some kind of fee to apply. We made it clear we wouldn't pay their fees and many of them offered to waive or offset their fees.

I really think the fees are there to prevent minorities from applying and to discourage "certain people".

[ipaint]

82. Plenty of apts. in my area (working class neighborhood) not doing credit checks.

Many just looking for rental references.

One of the advantages of not being able to afford a economically segregated middle class lifestyle.

[Manifestor_of_Light]

83. This is what my real estate agent says.

She said that credit checks do not indicate ability to pay rent.

A history of paying your rent means you will probably pay your rent.

[OllieLotte]

84. I see nothing wrong with this.

Plan on paying the $1400. If you have good credit they might come back and reduce it. Charging a application fee serves two purposes. There is a cost associated with running a credit and reference check. It also prevents people from wasting landlords time by filling out a bunch of applications around town then coming back and picking the one they want.

[lonestarnot]

85. Hmmm. What bullshit. Sounds like insurance salesman.

[OllieLotte]

86. I'm sorry you have a bad credit score. I'm sure it's not your fault.

See post #14. I have been there...and done that. Fools like you whine about a $45 application fee when whoneedstickets and I get hammered for thousands.

[upi402]

88. I used to own and manage my own rentals

Back then felons did not have a Scarlet Letter tattooed to their forehead. And I didn't chgarge a fee, just had them all apply at the same time and reviewed them as a stack of applicants. The fees were fixed.

I was burned every single time someone had money problems and I gave them a break. I was never burned when I held firm and screened effectively for job, history, referrence, and cash available in full.

my .02

(my last house is now for sale, which I've owned since the early 80's BTW)

[grasswire]

90. but the world has turned since that time

People lose their jobs now through no fault of their own. Many economic forces are at work that may negatively affect the dossier kept on a person. People might live with family members and thus have no rental history, for example.

Question: where are the people to go who are shut out of the rental roulette? Where are those families supposed to live? There's a real problem in American housing and part of it lies in the monetization of rental application process.

[upi402]

91. It's really stupid now

We've lost the plot. We are so far from the Christian society we claim to be;
tolerant, accepting, forgiving...
We're now Hobbesian and hypocritical. I wonder if we'll return to cooperatives, sometimes.

[grasswire]

92. well there is a movement called Common Security Clubs...

...for neighbors to help each other through the societal changes that are happening. I don't know if that qualifies as "collectives."

But the rental industry is operating by old standards, where someone who is short on money was automatically a bad or lazy person. That is no longer the case, as economic warfare against the middle class has devastated so many millions of families.

[Odin2005]

89. My landlord is also a coworker of mine and has told me some crazy stores about shitty tenants.

They would get evicted for loud parties, being behind on rent, or for drug-dealing, and other BS and they left pig-stys in their units that cost a fortune to clean and fix, such as big holes in the walls hidden by a picture, or a closet with REALLY bad mold. Landlords will do ANYTHING to keep such assholes out