Why is an appraisal important for determining 'fair rental value'?

An appraisal is crucial for determining 'fair rental value' because it involves an in-depth analysis of market conditions, comparable rental properties, and the specific characteristics of the property in question. By assessing market demand for similar rental spaces, an appraisal helps to establish a rental value that reflects what tenants are willing to pay in the current market. This assessment considers factors such as location, property amenities, and prevailing rental rates in similar buildings, ensuring that the determined rental price is competitive and justifiable.

The other choices highlight different aspects of real estate transactions but do not directly relate to establishing fair rental value. For example, while accurate property valuation is important for selling the property, it does not focus on rental pricing. Additionally, rental prices are influenced by various external market factors and trends, rather than being automatically increased through an appraisal. Lastly, while an appraisal may provide useful information that can facilitate lease negotiations, its primary function in this context is to evaluate fair rental value based on market assessments.