Most buyers in the current San Francisco market learn quickly that most sellers are pricing their homes lower than the price they’re seeking. This is a particularly common strategy in a seller’s market. Multiple buyers become interested and write offers. Sellers then have the upper hand when it comes to selecting the highest and best offer, which often translates into countering multiple buyers and having to negotiate little.

A look at all single-family home and condo sales in the time period from March 13-April 13, 2013 provides a clear window into the current market. Of the 218 single-family homes (median price: $965,000, 43 cash sales) and 264 condos (median price: $855,000, 61 cash sales) that sold, only a handful sold for less or at the asking price.

What this means for buyers is that it’s very important to know and be at peace with your maximum price point. Particularly in centrally located neighborhoods near public transportation, retail areas and freeways, competition is strong for what little inventory exists. A good rule of thumb is to consider properties priced at a lower number.

And yes, sellers will always prefer cash transactions to those involving a loan. This is because cash offers—accompanied by proof of funds—are much more of a sure thing than a loan. There are typically no appraisers involved, and there’s no underwriting team that can possibly torpedo the transaction. Cash offers also provide flexibility for a fast close, if that’s desired by the seller.

There’s not a conspiracy among sellers to “trick” buyers into thinking they can afford a property that will undoubtedly receive multiple offers. The reality is that sellers see success among homeowners listing low and selling higher, and they simply follow that strategy. (The real estate industry isn’t terribly imaginative, in case you haven’t noticed.)

If a seller decides to buck the trend and list at roughly the price he or she really wants for the house, there’s a likely chance that buyers will dismiss the property because they believe they’ll have to bid higher in order to get the property. So that condo that’s worth around $900,000? The seller who lists at $799,000 will do infinitely better than the one who chooses to go with $875,000.

For now, the list-low strategy pervades San Francisco real estate, and cash offers are popping up with surprising frequency. As the market fluctuates, this will probably change. But it’s important to know what to expect so you can refine your own house-hunting strategy.

Cash sales became commonplace in San Francisco in 2012, and they show no signs of slowing down this year. (See “Cash Sales Soared in 2012.“)

A look at all the reported cash sales from January 1-April 8, 2013 reveals that almost a quarter of all single-family home and condo sales were cash transactions. That’s a somewhat stunning percentage, and makes a huge statement about where people are putting their money.

Most condo cash transactions took place in neighborhoods such as Pacific Heights, Russian Hill, downtown, and the more urban enclaves of Mission Bay, South Beach and SoMa. Sixteen of the 131 condo cash sales in the aforementioned timeframe sold for more than $1.5M, but 73 sold for up to $1M.

Most of the 114 single-family cash sales occurred in the Excelsior, Bayview, the Sunset, Noe Valley and Bernal Heights. Eighteen sold for more than $2M, and five sold for more than $4M. A total of 69 houses closed escrow for up to $1M.

Even TICs got in on the act, with one Mission Dolores 3BR TIC in a six-unit building on a group loan closing escrow for $2,050,000.

All of this cash activity is all fine and good for sellers, but it unfortunately can wreak havoc with comparable sales from a buyer perspective. Because many cash buyers aren’t having appraisals done, they’re more willing to throw money at a desirable property because they don’t have to worry about an appraisal coming in low and jeopardizing a loan. For example, one 3BR/1BA, 1100-square foot house on Bernal’s north slope listed for $799,000 recently received 16 offers and ultimately closed escrow in a cash transaction, with a $1.2M+ selling price. There’s no way this property would appraise were the buyers getting a loan. But with no appraisal required, such buyers are going for broke so they don’t miss out on a property they like. And a new comp is born.

Indeed, single-family home and condo buyers with all cash paid an average of 5.5% and 4.4%, respectively, over the list price. The old adage of getting a discount by paying cash apparently doesn’t ring true in San Francisco real estate.

The real estate market in San Francisco has been bouncing off the walls since late 2012, and we’re officially in a seller’s market. Buyers are pulling their hair out in multiple-offer situations, and sellers are wondering if prices will increase as 2013 wears on.

We now have three months’ worth of sales to analyze, and that data indicates that prices are up as much as 6% over the past 180 days, particularly in the single-family home and condo markets. Indeed, the average price for a house in the city was $1,163,261 in the first quarter of 2013, and $897,278 for a condo. TICs sold at an average of $758,244 per interest.

Cash sales are continually popping up, especially in extreme multiple-offer situations. It’s gotten to the point at which buyers with loans, contract contingencies and reasonable offer prices don’t have much of a chance in a 10+-offer scenario.

But fortunately for buyers, Spring will bring with it more inventory. I’ve been selling real estate for more than ten years, and it never fails that inventory rises when the weather gets nicer. Homeowners who are wary of making a move without knowing where they’ll go next are considering short-term, furnished rentals as pit stops, or consulting a lender to see if they can qualify for what’s called a “bridge” loan that will allow them to buy first and sell second.

We’ll also be seeing many new condo developments start to sell their units this year, which will appeal to those looking for housing in prime, centrally located and transit-rich neighborhoods. (However, buyers can expect pricing for these units in the $900-$1,000/sq foot range, and only half the units in a given building will typically have a deeded parking space.)

If you’re an intrepid buyer heading out into San Francisco real estate waters, make sure you complete a solid preapproval so you’ll be ready when you unexpectedly see the home that you’re meant to buy. And if you’re a seller who’d thinking of putting your home on the market later this year, now is a good time to start consulting with your Realtor so you can put your plan in motion.

Sellers of properties in the $1.5M+ range found plenty of buyers on hand throughout 2012. The luxury home market steadily picked up speed as the year progressed, culminating in some pretty impressive numbers.

A total of 454 single-family homes and 185 condos traded hands in 2012 for $1.5M or more. In 2011, only 328 houses and 105 condos in this price range sold. So high-end buyers clearly moved from the sidelines last year and entered the ranks of San Francisco homeowners. Interestingly, the average luxury home prices were roughly $2.7M for houses and $2.5M for condos.

Though a majority of single-family homes unsurprisingly sold in Pacific Heights, the Lake District, Sea Cliff, Marina, Cow Hollow, Presidio Heights, Cole Valley and Noe/Eureka Valleys, a few other neighborhoods also saw some luxury action. These included Glen Park, the Inner/Central Richmond, Potrero and Dogpatch. On the condo front, luxury buyers flocked to Russian Hill and South Beach.

The mother of them all was the sale at 2901 Broadway (above), which hit the market way back in April 2007 for $55M and finally closed on December 8, 2012 for $28,250,000. (Though 2011 had its own over-the-top sale in November of that year, when 2950 Broadway sold for $29,500,000 with an $18M loan involved.) Eight other single-family homes changed hands for $10M+ last year, as well.

The most expensive condo sold last year was a 3BR unit at the Millennium Tower, which sold for $7,850,000.

As noted last week, cash sales were more common in 2012, particularly in the luxury market. Eighty single-family homes and 51 condos sold for $1.5M or more, and these homes were scattered across the city.

The San Francisco real estate market hit new highs in 2012. Activity significantly picked up over the summer, when serious multiple-offer scenarios and buyer overbidding proliferated. And I’m expecting this robust activity to continue in the coming year.

The S&P/Case-Shiller index of property values in 20 cities increased 4.3 percent from Oct 2011, the biggest 12-month advance since May 2010. It was the fifth straight month of year-over-year gains. In San Francisco, the year-over-year increase was 6.04 percent.

Indeed, home value averages were impressively high in the last quarter of 2012. A total of 672 single-family homes sold with an average price of $1,272,509 (propped up by 15 homes sold in the $5M-$28M range). Additionally, 598 condos sold at an average price of $914,198, with 23 such properties selling in the $2M-$8M range.

This year was also one during which many all-cash transactions took place, particularly in higher price ranges. For example, there were 114 single-family homes and 123 condos that sold in the last quarter for cash. As a result, it was sometimes challenging for buyers with loans to compete.

Buyers in our currently low-inventory market will welcome the return of new construction in the city, which is expected to increase in 2013-2014. As of October 2012, there were 4,200 new housing units under construction in San Francisco. Building permits for another 1,450 units have been approved, and permits for another 2,610 units have been requested. These predominantly include residential developments downtown, along the Market Street corridor in Eureka/Hayes Valleys, SoMa and South Beach.

Historically low loan interest rates, along with a growing tech sector and overall Bay Area population increase will continue to fuel demand for home purchases in 2013.

The San Francisco real estate market hit new highs in 2012. Activity significantly picked up over the summer, when serious multiple-offer scenarios and buyer overbidding proliferated. And I’m expecting this level of activity to continue in the coming year.

The S&P/Case-Shiller index of property values in 20 cities increased 4.3 percent from Oct 2011, the biggest 12-month advance since May 2010. It was the fifth straight month of year-over-year gains. In San Francisco, the year-over-year increase was 6.04 percent.

Indeed, home value averages were impressively high in the last quarter of 2012. A total of 672 single-family homes sold with an average price of $1,272,509 (propped up by 15 homes sold in the $5M-$28M range). Additionally, 598 condos sold at an average price of $914,198, with 23 such properties selling in the $2M-$8M range.

This year was also one during which many all-cash transactions took place, particularly in higher price ranges. For example, there were 114 single-family homes and 123 condos that sold in the last quarter for cash. As a result, it was sometimes challenging for buyers with loans to compete.

Buyers will welcome the return of new construction in the city, which will vastly increase in 2013-2014. As of October 2012, there were 4,200 new housing units under construction in San Francisco. Building permits for another 1,450 units have been approved, and permits for another 2,610 units have been requested. These predominantly include residential developments downtown, along the Market Street corridor in Eureka/Hayes Valleys, SoMa and South Beach.

Historically low loan interest rates, along with a growing tech sector and overall Bay Area population increase will continue to fuel demand for home purchases in 2013.