Should Application Acceptance Be Based On Seniority?

First, let me clarify – this is not an article discussing age discrimination! Seniority is defined as “a privileged position earned by reason of longer service or higher rank.” In this article, seniority refers to prioritizing your application acceptance procedures by the order they were received. For instance, you might hear from an applicant that “my application should be accepted because I submitted mine a day earlier.” Please don’t spend much time debating that logic.

If this sounds like you, it is time to reconsider. It is not a good practice to rank applications by the order they are received. Even worse, if you have a license to lease properties, you may be violating ethics rules and at worst, real estate laws!

Those Days We Receive Multiple Applications Are Great Days!

At least that is the way I look at it. Line them up and let’s go to work. Comparing multiple applications is usually not easy and the last thing that matters is who submitted their application first.

A few weeks ago, first thing one morning we received an application for a rental. The applicant wanted a nine month lease and had a large dog. In their screening, we learned that they were paying their current rent on time, but were struggling with other bills. They had employment in a couple of different jobs so income was easily verified.

Later, that same day, another application was received on the same home. This applicant was requesting a year lease and had no pets. They had little to no credit obligations, and their current rental history was good. The only thing that made their application more challenging was verifying her self-employment income.

Should The First Application Earn Priority Toward Approval?

Frankly, this line of thinking that the first applicant should be given every possible consideration is not a good business practice. It is not logical to add bonus points to an application because they beat other applicants to the gate. Since this topic comes up so frequently, I am reminded that what is obvious to one person is often not so obvious to another.

Fiduciary Relationships

There is a fiduciary relationship created when you hire a property manager in Indianapolis to lease your rental. Fiduciary responsibility means to always seek the best outcome for the client and never be self-serving. To add to this mix of duties, if one is a Realtor, they are also bound by a Code of Ethics that requires the same commitment to clients. Even further, if one is a member of the National Association of Residential Property Managers (NARPM), we have a Code of Ethics that states:

“The Property Manager has a fiduciary responsibility to the Client and shall at all times act in the best interests of the Client”.

WILMOTH Group Code of Ethics

So, basing application acceptance on a first applicant priority violates real estate laws and potentially two different Code of Ethics! Even without the laws and ethics issues, working on auto-pilot and leasing to the first applicant, because they are the first applicant, is just stupid business. Yet, this topic is discussed frequently in forums among leasing agents and property managers. Many times decisions are made for application acceptance based on seniority!

What should be the factors used for application acceptance? There is a whole list of them such as income history, rental history, and credit. Granting priority to the first application received is not one of them.

Hold Deposits

Some applicants attempt to work around timing of their application by providing a deposit with an application. Then they argue that because the leasing agent accepted their deposit, the applicants priority has been acknowledged. The simple way to get around this is to not take any deposits until an applicant is selected. Our on-line application process does not accept funds for a deposit.

No Surprises. Application Acceptance Was Not Based On Seniority

In our story above, we accepted the second applicant. Self employment income is not a significant issue. It is one that you want to understand but in this case the applicant was a salesperson with two years of consistent, verified, earnings. The first applicant was represented by an agent. The agent argued that because his client was told they were the first applicant, their application should have been acceptable. To make that argument you also have to assume both applications are comparable. Then it simply become a claim that boils down to his client should be given first dibs.

There are no such dibs. Plus the application was not the best one received. Most importantly, we have a fiduciary responsibility to our client, the owner, to make the best decision. That decision should not be based on seniority.

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WILMOTH Group is headquartered in Indianapolis, Indiana. We focus on providing creative local solutions for a variety of residential real estate needs including, properties for sale, property management services in Central Indiana.