The short answer to your question is yes, not only is it fair but also appropriate to collect an application fee from every applicant. In fact, if the application fee is not paid, then the applicant gets no consideration whatsoever as a potential tenant. As mentioned elsewhere in other responses to your question, the person taking the application, and the application itself should make clear that the application fee is non-refundable. It should be noted that application fees are not some type of windfall profit to the property manager/owner. It costs money to have reliable background checks done and credit reports pulled. These are real costs incurred by the property manager/owner whether or not the applicant is successful in renting the property. If there are background/credit issues that you dispute or would like to put in a more favorable light, you are free to explain to the property owner or his/her agent. I am sorry you were not selected for the rental , but from the facts you have laid out, the realtor did nothing wrong in refusing to refund your application fee.