Most large property management companies (“PMCs”) employ unlicensed individuals as “leasing specialists” who are responsible for the day-to-day leasing activities at a community. Spend a few minutes browsing job listings for these positions on LinkedIn or Indeed, and you’ll very quickly notice that a real estate license is almost never required. Typically, successful applicants for this role come from entry-level jobs in the retail and hospitality sectors. But what enables the unlicensed staffing model and what are its effects on consumers?

It’s a Gray Area

While there are certain variations in state-by-state guidelines, the general consensus among regulators is that non-licensed individuals who are employees of a duly licensed property management company are permitted to provide a limited set of services on behalf of their employer. For example, In Section 10131.01 of the California Business and Professions Code (B & P), the state puts forth clear permissive provisions regarding the activities of non-licensed individuals.

1. Showing rental units and common areas to prospective tenants.

2. Providing or accepting preprinted rental applications, or responding to inquiries from a prospective tenant concerning the completion of the application.

3. Accepting deposits or fees for credit checks or administrative costs and accepting security deposits and rents.

4. Providing information about rental rates and other terms and provisions of a lease or rental agreement, as set out in a schedule provided by an employer.

5. Accepting signed leases and rental agreements from prospective tenants.

Notably missing is the ability to negotiate leases, which remains strictly the purview of licensed individuals in essentially every jurisdiction.

Current job listings for this position require that applicants should be “tenacious and skilled at overcoming objections” and “[execute] sales closing techniques successfully” (taken from job descriptions for leasing specialist roles at two NMHC 100 PMCs). It stands to reason that many common sales tactics would pass regulatory scrutiny: creating urgency, emphasizing benefits, painting a picture of the prospect living in the unit - all strategies that do not entail any sort of negotiation.

But what happens when the prospect asks for the look and lease special a week after touring because the unit is still available? Peeling back the onion is likely to expose potential ambiguities. Nevertheless, the industry has generally taken a unified stance on this risk.

So how is it that a PMC’s core sales motion relies on individuals who cannot negotiate the terms of the thing that they are selling?

Going Down the Rabbit Hole: The Role of Matrix Pricing

Leasing specialists at large properties typically quote rental rates generated through revenue management software: a sophisticated automated pricing system that sets rental rates based on a bevy of factors. The algorithm generates a pricing matrix for each available unit, reflecting different prices for each possible lease start date and term. And similarly to hotel rooms or airline flights, prices can fluctuate frequently throughout the day or week. Of course, the Department of Justice recently announced a lawsuit against RealPage for its alleged antitrust violation with regard to these pricing algorithms.

Now, to the leasing specialist, the rent matrix serves as the aforementioned “schedule provided by an employer” from which they can quote rates to potential applicants. Just name your move-in date and lease term and let the matrix spit out your price - no negotiation required. According to the DOJ’s complaint against RealPage filed as of August 23rd, landlords using revenue management are “less likely to negotiate on price…[and] any potential negotiation instead turns on lease term and move-in date, which AIRM and YieldStar adjust the pricing for to avoid overexposure for the landlord in the future.”

This approach extends beyond base rent. Ancillary charges—such as pet fees, storage costs, parking fees, and utility expenses—are typically priced separately and systematically. This further standardization minimizes the leasing specialist's discretion in pricing decisions, cementing their role as a mere facilitator.

Computer generated quoting also serves as a safeguard against fair housing violations by ensuring consistent pricing across all tenant demographics. According to RealPage, their revenue management software helps management companies stay compliant with fair housing laws by “increasing pricing transparency and giving all potential renters equal access to that matrix of rent options, including the lowest available rent.” Moreover, matrix pricing helps to “eliminate inconsistent rent negotiations and bidding wars that can occur in manual pricing, thus reducing the possibility of discriminatory pricing in violation of fair housing rules.” And to that end, revenue management software certainly seems like a strong risk mitigation strategy for large operators.

So…Can You Waive the Pet Fee?

While some consumers might expect certain fees to be waived or concessions to be given as part of a negotiation process, it is generally accepted that corporate real estate owners do not negotiate apartment leases. Commentators frequently make the analogy between matrix pricing and the way that hotels and flights are priced; however, the buying process for the two products could not be more dissimilar. A standard apartment lease is a high touch, offline-to-online transaction in which:

1. the buyer has an in-person meeting with a individual acting as an intermediary representing the product;

2. the buyer reviews and signs an extensive legal contract; and

3. the buyer is contractually committed to the product for at least one year.

All in all, quite a bit different than booking a hotel room for the weekend on Expedia. Apartment leasing also differs starkly with most other real estate transactions where negotiation is not only allowed but expected. In fact, it’s difficult to find any analogous buying process where negotiation is completely off the table. The insurance industry, where rates are set in conjunction with state regulators, is likely the most relevant comparison.

In her prepared remarks regarding the DOJ lawsuit, Lisa Monaco, the Deputy Attorney General, appealed that “renters must be able to negotiate prices with landlords” to ensure healthy competition for rental housing. And while it’s uncertain whether the future of leasing will more closely resemble buying a Tesla off the website or a used car off the dealer, it is certainly worthy to closely monitor how the regulatory environment affects the future of lease staffing, negotiation, and fair housing laws.

Poor leasing is one of the major reasons owners fire their property management companies (PMCs). And since leasing is one of the few controllable variables in property management, it seems reasonable to hold PMCs to a high standard. Of course, whenever the leasing market cools, owners often harbor the sneaking suspicion that their leasing team just isn’t cutting it. But to what degree is that frustration actually justified?

Let’s start by defining the objective in multifamily leasing. At its core, leasing involves striving to find the optimal balance between price, speed, and cost to optimize revenue. For example, if you increase the unit’s price, you sacrifice speed through increased days-to-lease. You might try to counterbalance that by increasing costs: more concessions, a greater advertising spend, or higher broker’s commissions. We can neatly summarize the financial tradeoffs of a lease with the formula below, balancing revenue against losses from vacancy, concessions, and other costs. This gives us a clear framework for maximizing leasing profitability in the form of net lease value.

While the variables are fairly self explanatory, I’ll note that daily costs should include the staffing expenses incurred by the property to run the leasing program. Before we go further, let’s also consider a few other variables that are not fully encompassed by the formula.

Additional Considerations

• Tenant Quality: Tenant quality or creditworthiness should boost net lease value by reducing default risk. However, achieving this may also increase the number of days vacant or concessions/marketing costs. While this should probably be integrated into the formula, finding the right methodology is complex and outside the scope of this post.

• Regulatory Constraints: In rent-stabilized markets such as New York or Los Angeles, the formula misses the strategic need to secure a higher gross rent, even at the cost of more days vacant, concessions, etc.

• Major Financial Events: The formula also does not consider the broader context of financial events such as refinancings or sales, where more days vacant or concessions may be strategic to achieve elevated rents, boosting NOI and cap rates for better debt terms or exit multiples.

• Renewal Likelihood: The formula does not consider tenant retention, where above-market rents or heavy concessions may deter renewals, increasing future turnover costs and vacancies.

Now, at the very least, we have a rudimentary quantitative method to measure the leasing team’s ability to balance these economic tradeoffs. Can we use this formula to evaluate the PMC’s leasing performance? Let’s first face the major epistemic hurdle in benchmarking it head on.

Impossible Counterfactuals

During a weekly leasing meeting, stakeholders debate various tradeoffs in their attempt to unblock the leasing funnel. Should we spend more money on Apartments.com? Should we increase the concessions from 4 weeks free to 8 weeks free?

Titrating the inputs of a complex, multivariate equation involving conflated and unknowable variables is certainly more art than science. And while reacting quickly and decisively to market feedback certainly seems like a virtue, we risk praising whoever is first to drop their pants. Patience and persistence in the face of disappointing short-term results may prove to have been the right move after all.

A common industry solution is to rely on comps to judge performance relative to one’s peers. By looking at things like pricing, occupancy, concessions, etc., one can begin to piece together a picture of what competing net lease value looks like. While certain data vendors such as HelloData are improving how managers can use comps to benchmark performance, there are still far too many factors that are either unknowable or highly subjective. For instance, the competing property that’s more occupied may simply be spending an egregious amount of money on digital advertising and staffing, yet none of that data appears in the comp.

But that’s just one half of the picture. My core thesis on comps is that apartments are just not particularly fungible. This was recently evidenced by a 2025 RealPage Analytics report showing that seemingly identical units in the same submarket can have rent variations of up to 20% due to subjective factors like views, design, or building reputation. The reality is that vibes swing pricing, and a unit which appears identical in every way to a comp might be eight percent better on a vibes basis.

Seeking Alpha

Since counterfactuals are unknowable and comps unreliable, let’s pivot to an alternative method: Net Lease Alpha. This approach tracks the year-over-year increase in net lease value for the same unit, measured against MSA rent growth. For example, if a unit achieved a net lease value of $1,000 last year and MSA rents grew by 3%, the PMC should target $1,030 this year. Exceeding this signals outperformance, while falling short indicates underperformance—much like a fund manager measured against the S&P 500.

Net Lease Alpha avoids several of the pitfalls of traditional methods: the problem of fungibility and the limitation with counterfactuals. All other KPIs, such as occupancy, gross revenue growth, average days-to-lease, or cost-per-lease, are simply inputs that involve potential tradeoffs made at the expense of another factor. But what about drilling deeper, say, benchmarking against Class A apartments in Austin, TX? While tightening the benchmark could be helpful for accuracy, it runs the risk of falling back into the same issue of imperfect comparisons.

So Why Are PMCs Getting Fired?

If poor leasing is so hard to quantify, why are owners often frustrated with their PMC’s leasing efforts? Let’s explore three possible reasons:

Blaming the PMC for Market Issues

When faced with market volatility, some owners are effectively “selling everything that is not bolted down,” unfairly attributing market-driven challenges to the PMC.

Instinctual (or Potentially Irrational) Behavior

Given that leasing is incredibly difficult to quantify, smart owners likely develop a gut instinct for recognizing skill. This is akin to Justice Potter Stewart’s famous opinion: “I know good leasing when I see it.” Effective owners observe patterns that result in better leasing outcomes and expect these from their teams.

Leasing Mistakes by the PMC

Leasing mistakes are errors that are so objectively bad that there is no possible way to justify them as part of an economic tradeoff. Common examples of leasing mistakes include failing to respond to inquiries within 24 hours, not posting units to listing sites after they become vacant, not offering weekend tour availability, and having no leads on a listing after seven days. At best, one might attempt to justify a few of these as part of a cost-minimization strategy, i.e. sacrificing performance for reduced staffing costs, but there is effectively no reason to believe they contribute to net lease value.

While mistakes are unavoidable, they severely erode owners’ trust in management’s competence. I also believe that they form most of an owner’s “gut feel” about their PMC’s leasing performance. Leasing mistakes not only can justify terminations in cases of clear incompetence but also offer an opportunity for PMCs to build trust through consistent execution.

Conclusion

While Net Lease Alpha offers an alternative framework for evaluating performance, I believe most owners will continue to evaluate managers by their leasing mistakes. In my next post, I will share a more comprehensive list of leasing mistakes and procedures to avoid them.