Should you advise clients to lease out their homes as short-term rentals?

  • Vacation rental websites suggest that checking a vacation renter's email address and social network is a valid enough background check.
  • Vacation rental websites don’t know who their renting to.
  • Real estate agents' liability is limited for a lease on a vacation rental, but a background check can decrease potential losses.

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Many years ago, I was a residential real estate agent in Southern California. When I had clients who were buying second homes, I was always afraid to recommend they put their property up as a short-term rental due to the fact the property might get damaged and the client might take it out on me for recommending this idea.

With the existing peer-to-peer (P2P) websites such as Airbnb, VRBO and HomeAway, things have become a lot easier and much safer. Most guests are respectful, have a history of little to no incidents and are simply looking for a place to relax, shower, dress and sleep at the end of the day.

The danger

On the other hand, homeowners might have an experience of coming back home to stolen or broken items as a result of a house party, for example. Have you stopped to think about who your homeowner clients are letting into their property? Does the renter have a criminal history? Do they bring unauthorized guests into the home, or are they really even who they say they are?

Although most sharing websites like these verify profiles through social media platforms and sometimes through submitting government-issued IDs, there is no process to vet users through background checks to make sure they do not have a criminal history.

A user with bad intentions can easily pretend to be someone else and submit another individual’s likeness, create social media pages in a matter of minutes and produce fraudulent documents. The entire process is done online.

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How do they distinguish false identity documents from real ones? How do they know that the person claiming to be Jill Smith is, in fact, Jill Smith? A picture, Facebook profile and scans of a passport or a driver’s license are not enough.

Better vetting

Recommending to your client to run a background check on their vacation renter enables them to make a more informed decision on who they allow into their home for a few nights. It’s easy, takes less than five minutes and can be very reasonably priced.

Tenant screening reports provide detailed information such as a national criminal records search, credit report and FICO scores, evictions, liens, suits, judgements and even incident reporting. An incident report will allow your clients to view any past lease violations from rental properties the individual has occupied.

Satisfied clients

As a real estate professional, you are aware of the amount of influence a background check can have on someone’s decision on whether to accept a vacation renter. By recommending services that provide a more thorough screening process, your client will know you are looking out for them.

They will be able to take better care of their investment by screening renters, which in turn will pay dividends in the long run. Screening renters mean less maintenance, repair and home insurance costs.

Your clients will have peace of mind because they will know they’ve done as much as possible to protect their assets. Many of these users are often paying upward of $300 per night for accommodation. However, this does not give them license to disrespect someone’s home.

Joe Killinger is the CEO of theRRD. Follow Joe on Twitter or LinkedIn.

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