I don’t do it, but it may just be the dyanmics of my area, i.e. NYC, and the need to turn it over ASAP.
First, when I interview tenants, I ask about what other units are like in the area: i.e., do they paint?, is it clean?, amount of rent, application fee etc. As far as I can ascertain, maybe one out of ten in my area charge it, if that.
And the reaction I find from applicants is “it’s a ripoff”, to “no one else charges for it, what’s so special about this place”?? It seems people run away when it’s charged, no refunds, and the chance of acceptance is low.
I usually get 100 or more calls for a rental, I do my weekend open house, get up to 25 applications during the busiest years, picked my tenant on Monday, and lease signing by Wednesday. I don’t need to make another $25.00… Often, if the prior tenant leaves before monthend, I might even be able to rent it out by the first of the following month.
I don’t want to reduce the pool of applicants from 25, down to 3, where people are so desperate that a $25.00 ripoff is not an issue. My aim is to optimize the number of applicants to find the best.
If I was a tenant, and some look for as many as 30 places before they rent, and if they shell up $25.00 per place, they’re better off paying a rental agent a contingent fee of one month for the unit, which run $1,200 to $1,400 in my area right now. One thing rental agents do is they run all the checks on the tenant so they can provide landlords with “qualified tenants”, and they can make they tenant check available to the landlord for free.
Another problem is if I took applcation fees for 25 tenants, assuming it becomes practice in the area, I accept one, turn down the other 24, I don’t want to start explaining why is it I turned down the other 24. And if anyone finds out I took 25 “no refund fees for rental applications”, I’m sure the agressive “consumer affairs dept” would start making trouble for me.
However, I do my own tenant check myself anyway. And why look for trouble??