2020…What an unexpected experience! COVID-19 tipped our industry on its head, forcing unexpected changes with a serious sense of urgency.
Several trends emerged and surged. Let’s review…
Ban on Eviction Filings
CARES Act Memorandum – What a start to the year! Landlords leasing federally backed housing (e.g. federally subsidized housing, rural voucher-program housing, and housing financed through federally backed mortgages) could not file new evictions or charge additional fees for non-payment until the ban expired.
Some states and localities created their own stricter eviction bans. The full impact is yet to be to be determined, but here’s what we know to date:
- Impact to Tenants: Federal, state, and local bans gave many renters a short-term reprieve, but in numerous cases, the moratoriums only delayed the inevitable. This led to a surge in eviction filings when the bans were lifted. As of July 14, 2020, 1 in 5 renters claimed to be behind on their rent.
- Impact to Landlords: As a result of eviction delays, landlords themselves may have taken advantage of the CARES Act and forbore payments on their mortgages. Significant decreases in rental income could lead to declines in property upkeep and foreclosures, which in turn could result in more evictions and loss of affordable housing certifications.
- Impact to the Overall Community: Local municipalities—already struggling to cover increased needs during the pandemic—rely on property taxes from owners to fund essential services, such as health care, education, nutrition services, and housing programs. When rental properties foreclose, the decrease in property tax has an impact.
Information source: Source CBPP.org
Virtual Tours and Online Applications
Gone are the days where virtual tours and online applications were a “nice to have” option.
This concept isn’t new, so what changed in 2020?
Prior to 2020, 30% of virtual tours showed only model units. Now, full online community tours are essential. 90% of marketers say that virtual tours directly contributed to an increase in sight-unseen leases. Virtual tours have also increased page views by 31% and conversion ratios by 20%.
It’s believed this trend will continue to increase as renters become accustomed to leasing online. Naturally, the ability to provide online applications with virtual tours is essential.
- Helpful Tip: Today’s renters want a more-connected virtual experience. A 2018 Coldwell Banker Real Estate survey found that 68% of respondents use virtual reality technology to visualize what their furniture will look like in their prospective space.
Information source: multifamily-coronavirus-survey
With increased online leasing and the state of the economy, all types of fraud have spiked. Of the four ID frauds most commonly encountered in the rental housing industry, synthetic fraud is the hardest to identify but accounts for an estimated 85% of all identity fraud in the country.
But what is a synthetic ID? It’s a fictitious identity created over a period of time. Synthetic IDs involve stolen or purchased SSNs used in combination with fictitious names and birthdates. These IDs can include public-record data, credit information, convincing documentary evidence, and social media—all complicating your efforts to identify these prospects before they become your residents. On the surface their background check looks stellar.
The best line of defense is catching synthetic fraud early in the application process by utilizing advanced ID verification technologies. There is no recourse when you lose a lease to a synthetic fraudster because no such person exists!
- Helpful Tip: While it’s impossible to completely prevent synthetic fraud, software programs available through resident screening companies, such as AmRent, can alert you when synthetic fraud patterns are detected. They can also share best practices for verifying identities.
Information source: NAA Synthetic Fraud White Paper
With the increase of online applications and more than 833,000 Americans seeking unemployment in September of 2020, income fraud has also increased. Whether an applicant slightly overstates their income or completely fabricates their employment, this type of fraud can be challenging for even the well-trained eye to catch.
More shockingly, there are websites that provide tips on how to create fake paystubs or W-2 forms for around $10. They will walk an applicant through generating authentic looking paperwork on popular payroll templates. All you have to do is Google “fake paystubs” to see all the available resources.
If you are verifying income on-site, the following steps may help minimize the risk. However, if the applicant has used a site as mentioned above, these tips won’t detect potential fraud:
- Call the applicant’s previous employer
- Ensure all information is included (Gross pay, taxes, insurance, and other deductions)
- Check for spelling and decimal errors, etc.
- Confirm salary or wages by asking for bank statements.
- Double check the figures
To protect your operation from this type of fraud, we recommend using an automated income verification service that authenticates information directly with a bank or an employer.
What a year! As 2020 draws to a close, we believe that AmRent has met these challenges with success and has provide customers with effective solutions. If your screening service is not delivered through AmRent’s direct integration with Rent Manager, check with your current provider to learn how they are managing current and future screening challenges.