Multifamily Rental Property Managers Report Increasing Prevalence of Application Fraud
85% of respondents saw an increase in application fraud and an increase in the ease of altering financial documentation
Los Angeles – July 26, 2022 – Snappt, the leader in application fraud detection for residential apartment property managers, today released the 2022 State of Apartment Tenant Screening Survey. The survey shows 85% of property managers feel consumers are becoming more comfortable with committing application fraud. The pandemic has made things difficult for MDU property managers. Fraud has risen, government-mandated eviction moratoriums have squeezed landlords, and now rents are rising. The average tenant can doctor a paystub or bank statement in minutes to improve their financial picture, and the result is often impossible to spot with the naked eye. Snappt has scanned more than one million financial documents, finding that one in eight have been fraudulently altered. With 3.7 million residential evictions filed every year, costing an average of $7,500 each, evictions are the single highest cost property managers face.
"Application fraud is more prevalent than you would think, especially in a world of online applications," says Daniel Berlind, CEO of Snappt. "We estimate 11 million fraudulent applications were submitted last year in the U.S. alone.”
Never has the need to accurately screen applicants been so important. Survey results show that the most common goals property managers have when screening applications include:
- Make sure applicants have the financial resources to pay rent
- Avoid evictions
- Reduce criminal activity
- Avoid disruptive tenants
- Avoid property damage
One property manager in Texas reported, “the amount of fraud that has come through lately has tripled and we have to carefully, with a fine-tooth comb, review everyone’s check stubs.”
The most common problems property managers report facing in today’s market include:
- Rent-related issues. Tenants being late on rent payments, paying less than full rent and (worst of all), stopping rent payments completely.
- Damaged Properties. Increasingly, property managers are seeing damage done to properties after tenants move out.
- Evictions. In today’s world – with the pandemic, rising rents and an increase in fraud, evictions are becoming more common.
- Tenants skipping out.
- Disruptive tenants/criminal activity.
The problem has been compounded by the rapid adoption of proptech during the pandemic and how easy it is to obtain or create fake documents. Property managers reported that the most crucial aspects of applicant screening they use to address this issue include:
- Verify ID is accurate
- Verifying the paystub is accurate
- Verifying the bank statement is accurate
- Check prior evictions
- Credit check
But with a large list of screening requirements and available tools, we asked what takes the most staff time to verify applicants:
- Verify the bank statement is accurate
- Verify the pay stubs are accurate
- Checking references
The full 2022 State of Apartment Tenant Screening Survey is available at https://www.snappt.com/state-of-apartment-tenant-screening-2022-survey. The free report includes a list of top strategic tips property managers can take to detect fraud and decrease evictions.
Snappt, a Los Angeles based real estate technology company, provides a quick and inexpensive data-driven fraud detection service that can accurately spot fraudulent documentation. Snappt is used by 3 of the top 6 property management firms in the US.