Which is a common reason for property appraisal?

The correct answer highlights the role of property appraisals in providing an unbiased assessment for lenders. In real estate transactions, lenders often require an appraisal to ensure that the value of the property supports the amount of money being loaned. This is crucial for managing financial risk; the lender wants to confirm that the property is worth what they are financing. An independent appraisal helps to maintain objectivity and assess fair market value, which protects both the lender and the borrower.

While establishing a selling price in a rising market, determining rental income potential, or evaluating necessary renovations are also valid uses of appraisal, they are not as central to the process of securing financing as the need for an unbiased evaluation for lenders. Appraisals that are impartial and professionally conducted can significantly influence the lending decision, making them a fundamental part of real estate finance.