The Neuroscience Behind Tenant Screening

Nest Thermostat

I own a Nest Thermostat. It’s a great little device because it’s internet connection allows it to learn about my heating patterns: It knows when I wake up and how warm I like it. It also automatically turns the heater off when I leave. My favorite feature is the ability to control it with my phone. That means I can turn it on before getting home so I arrive to a toasty home (or when sitting on the couch).

Oh yeah. And it cost $250.

That’s a lot for a thermostat. Especially when I have no problem installing a “regular” 7-day schedule thermostat in my rentals.

So why do I own such an expensive device when most people know me to be overly frugal? If I’m honest, it’s because it looks cool and I like telling others I own one. It’s not because I wrote down a rational list of features and decided the benefits outweighed the cost of the product. That would almost be weird.

No. I wanted one emotionally and once I justified enough “reasons” (internet connected, control via phone, etc), I bought one. And believe me, I looked hard for good reasons. I looked to the point that I ignored other possibilities and warning signs. In this case, it worked out and I really enjoy owning a Nest, but that’s not always guaranteed when making a decision based on emotion.

Buying an expensive thermostat based on emotion is one thing, but giving the keys to your rental based on emotion is a whole other thing.

 

Neuroscience Says You First Screen Tenants Based on Emotion

You might find someone who you instantly want to rent to (“I really like this person!”), or more likely on the flip side you’ll meet someone you want nothing to do with. And then you start rationalizing until you’re finally able to justify accepting or rejecting that person.

This is actually normal behavior.

According to neuroscience, our intuition (our emotions) are extremely fast at figuring out what we want. The problem is that we can’t explain it until we dig deeper into why we feel that way. Because we’re evaluating potential tenants, we have to be able to explain why we’re accepting or rejecting them. In the Harvard Business Review article “When to Sell with Facts and Figures, and When to Appeal to Emotions“, it describes a study that gives a great example of how fast our intuition can be.

The Iowa Gambling Task study, for example, highlights how effective the emotional brain is at effortlessly figuring out the probability of success for maximum gain. Subjects were given an imaginary budget and four stacks of cards. The objective of the game was to win as much money as possible, and to do so, subjects were instructed to draw cards from any of the four decks.

The subjects were not aware that the decks were carefully prepared. Drawing from two of the decks led to consistent wins, while the other two had high payouts but carried over-sized punishments. The logical choice was to avoid the dangerous decks, and after about 50 cards, people did stop drawing from the risky decks. It wasn’t until the 80th card, however, that people could explain why. Logic is slow.

But the researchers tracked the subjects’ anxiety and found that people started to become nervous when reaching for the risky deck after only drawing 10 cards. Intuition is fast.

So it’s normal to have that “Spidey Sense” tingly feeling about people right away. The trick as a landlord is to not go too extreme: You don’t want to simply accept/reject someone based on how you feel right after meeting them. You also don’t want to blindly follow a set of rules, suppress any feelings you might have about the person, and not add any of your own intelligence to the process.

If you do one of the extremes, you can end up with a false positive where you accept/reject when you shouldn’t, and you also open yourself up to illegal discrimination. That’s why you need to do what they did in the study: when you have that initial emotional response, keep digging. Keep flipping cards by asking for details by saying, “Tell me more”. Keep going until you can fully explain you’re feelings.

Once you can articulate their situation, that’s when you can compare them to your objective criteria.

 

Conscious Minds Become Overloaded By Too Much Information

If you have just one criterion: (for example) earn 3x the rent. And that was the only item you screened against; it would be fairly easy to evaluate them in your head with a proper balance of emotion and logic.

But it gets complicated when you add more criteria: Not just their income, but also their credit score, their background, and their rental history (which has a bunch of different variables itself!). For some of them, they’re easy because they’re required. For others, it’s a little more gray (what is an “acceptable credit score”?). With so many variables, the normal behavior is to rely on our emotions to decide. Back to the Harvard Business Review article:

This conclusion is backed by a 2011 study based on subjects selecting the best used car from a selection of four cars. Each car was rated in four different categories (such as gas mileage). But one car clearly had the best attributes. In this “easy” situation with only four variables, the conscious deciders were 15% better at choosing the best car than the unconscious deciders. When the researchers made the decision more complex – ratcheting the number of variables up to 12 – unconscious deciders were 42% better than conscious deciders at selecting the best car. Many other studies have shown how our conscious minds become overloaded by too much information.

When screening tenants, we’re like the 12 variables part of the experiment and it’s almost impossible to keep everything we learn logically in our head. So not only do you need objective criteria, but you also need a way to systematically evaluate each criterion and not miss anything. This will get you back into the proper balance of using emotions initially and then validating those emotions with conscious logic.

 

How To Score Your Potential Tenant

The S.O.L.I.D. Screening Method includes a tool for scoring tenants. Assuming they meet some required criteria (like no smoking and earning 3x the rent for example), here’s how it works: each screening criteria has at least one yes/no question. If they meet one of the lines, like for example “They make 3x the rent”, they would get +1 on their score. If not, no point. If the total number of points exceeds 15, we’ll accept them. What’s cool about this system is that it takes a messy, complicated process where we tend to overly rely on intuition and it makes it truly objective. That way we can feel confident about our decision because:

  1. we can explain it
  2. we’re able to be consistent
  3. it stops us from screening people intuitively on items we shouldn’t be screening on, and
  4. it also stops us from accepting someone we shouldn’t.

By using objective criteria and a systematic scoring sheet. It allows us to use our intuition at the beginning of our conversation to dig deeper when our Spidey Sense tingles, and then translate that over to a logical objective decision. That’s the power of using the S.O.L.I.D. Screening Method.

 

If you want the full S.O.L.I.D. Screening Method, get it right here. It’s free.

 

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