Determining the appropriate application fee is a balancing act for Texas landlords. You must cover the rising costs of background checks and employment verification without deterring qualified applicants. Based on recent industry observations and firm experience, here is a breakdown of the current landscape for rental application fees.
Understanding the Market Average
In the current Texas rental market, the average application fee typically ranges between $55 and $75. This amount is generally widely accepted by the public for standard background and credit screenings. While large-scale property management firms may charge less due to high-volume discounts from screening providers, smaller operations typically find the $75 mark necessary to cover their out-of-pocket costs.
The Impact of High Fees on Occupancy
While third party verification services can drive costs up, increasing fees significantly can have unintended consequences. Data has shown that application fees in excess of $100 results in a significant decline in applications. Prospective tenants, particularly those looking at more affordable housing in the $1,500 to $2,000 monthly rent range, are highly sensitive to these costs. When multiple adults apply for a single property, an application fee over $100 per person becomes a major deterrent.