October 10, 2015

$10,000 in Application Fees. Fair?

The redistribution of wealth is a common topic in the beautiful city of San Francisco, but we suspect the proponents would qualify their opinions after reading this Bay Citizen article by Scott James: In SF's Tight Rental Market, Paying Just to Look.

San Francisco has one of the hottest rental markets, which means more applicants than rentals.  

Mr. James tells us of a vacancy that received 250 applications during a showing, which netted the landlord roughly $10,000 in application fees.  It is a $3,500/month rental.

Is this wrong?

Are tenant-applicants being exploited in San Francisco?  Not if they understand they may be one of 250 and are willing to hand over $40 application fees for each desired vacancy.  

Using the same math and assuming all San Francisco renters are equal in their credit worthiness, an applicant will have to budget $10,000 to submit as many as 250 applications before being invited to rent.

The dynamics of San Francisco's rental market are far outside the expected market behavior for RentValet's target markets, but this story gives us the chance to present the RentValet paradigm shift.

RentValet is the first to provide applicants with the ability to notify multiple property managers with a single fee of $19.99.  Federal Law requires RentValet to present applicant privacy information to a single landlord.  This creates a first-come first-served opportunity for landlords.  The first to respond to the applicant captures that applicant, then leads that applicant through our online screening and leasing process.

Had the San Francisco landlord and his applicants used RentValet, the landlord would have received $0 in application fees.  He would have received notifications from the 250 applicants, each presenting their Income-to-Rent Ratio.  This is a key factor in qualifying applicants.  At a glance, even with 250 interested applicants, the landlord could select the best qualified applicant and complete the application process online.  

The remaining 249 RentValet applicants would still have an 'Open' transaction at RentValet.  They could add more vacancies to this transaction, at no cost, and continue to communicate with area landlords until they were captured.  Their total out-of-pocket costs would be $19.99 each, whether they end up sending their interest to 2 landlords, or 250.

San Francisco tenant applicants have four options:

  1. Status Quo - Continue to pay exorbitant fees,
  2. Live elsewhere,
  3. Adopt RentValet,
  4. Pass and enforce a law against application fees.
Our thanks to RentValet friend Bob K. for sharing this story.

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