Security Deposits

I'm hoping I can gain some insight on this. I have several communities that are leasing for our waitlist. In our application it states that once you are approved you are given 24 hours to place a deposit on the apartment in order to take it off of the market. It states that if you cancel, you forfeit the deposit.

I have recently had two situations where the prospect put the deposit down to hold a unit that they have not seen because it is still occupied. They are leasing strictly on pictures on line and what my staff sends to them. They decide they do not like the apartment once they see it and want their deposit back. One individual thought the rooms looked bigger in the pictures and will not be able to fit her furniture in it now.

Pictures that we use for marketing are units that people have lived in previously. We do not have a model for this community. When people see photos of that community, they see pictures of a unit that someone is going to move into.

My feeling is that leasing sight unseen is a gamble you are going to have to take if you put the security deposit. Once she sent her deposit to us, we made the apartment unavailable to people coming in the door.

How do you handle this situation? Does she forfeit the deposit when you have held an apartment off line for her? or do you return it to her because she rented the apartment without seeing it?

Our property requires a "holding fee" which is usually less than the actual deposit. Our deposits for a one bedroom run anywhere between $519.00- $569.00 but we ask a holding fee of $299.00 which in turn will be applied to their security deposit when they move in. If they chose not to move in than they forfeit their holding fee. The majority of renters rent sight unseen as the model rarely is representative of the standard apartment for rent. Most models have selected upgrades installed at a premium. By advising applicants that the fee is nonrefundable they know the risks. If this is in the fine print and it was never discussed with them I think that is pulling the wool over their eyes a little and doing an unjustice to the applicants.

The best way to prevent this from happening in the future is to have all information available to them including room sizes with dimensions, features of the apartment, color of carpet, upgrades available in that unit, etc. So you can be as honest as possible with them. If the room sizes were given out when the applicant put in their application then they would never question if their furniture would fit because they would be able to determine their furniture size in regards to the dimensions of the room. Then it would be something that they didnt' consider not you. I highly recommend walking the unit as soon as you receive a notice to vacate so that you have that information on hand it also helps with faster turn around times so you can preorder your parts etc.

This has happened here in the past and usually we explain to them that they put down a nonrefundable deposit but we do work with them. If we are able to rent the apartment within 48 hours we will refund their full holding fee. We explain to them we are not trying to make money off of them but we are not in the business of losing money and we will do our best to re-rent the unit on their behalf. IF we don't re-rent immediately we keep their fee. In most cases, we end up re-renting the unit pretty quickly because I keep all guest cards and I simply send out a mass email to those who were interested and waiting for an available unit.

Hope this helps!

This is a good question and more people will be facing the issue as occupancy conditions and demand improve (YAAY!) So people will have to lease more sight unseen. We are LOVING leasing notices and building up our waiting list!

Chrissy's answer is great. To take it one steop further, can you have floor plans online that are interactive so people can "play" with furniture placement? Or could you print out BIG hard-copy versions of your floor plan, have "paper doll" furniture that people could move around? If your floor plans vary from address to address, you may have to measure each time you get a notice, but then you'd have accurate info on file next time that apartment home turned.

As far as the money part goes, if the laws in your state allow it, you could deduct rent from the deposit for the days vacant until you could lease it to someone else. Assuming you can rerent it, you are going to be better off, even if you are out a little vacancy loss, than if they moved in and were dissatisfied the whole time.