As Jed mentioned before I have some good experience in working with REO homes in both San Francisco and the Northern Peninsula. In fact, I'm helping two clients purchase REO properties right now in Pacifica and Daly City; so I'm pretty familiar with the current environment. It's defintiely a different ballgame in dealing with these types of properties as the banks are not very forthcoming in providing the necessary information. However, with some patience there is excellent opportunity to find some great deals. The bottom line is that the banks need to clear these assets of the books and they are flexible on price.
Please feel free to contact me at firstname.lastname@example.org if you have any questions.