I have two clients receiving REO list updates from me already, if you would like a copy (it generates automatically and then sends an e-mail to you with new foreclosure listings every day), just let me know.
As you are reading through the realtytrac data, you can become misled pretty easily because only certain information is released. For instance, a home in Los Altos may show up with a $350,000 default amount. You may not know the amount owed on the 2nd loan (many times homes have junior lienholders). And, homes will be priced to what the banks discern the market will bear, when they are actually for sale.
So you can spend a lot of energy being interested in homes that have begun to go into default that are not for sale when you look at all of this data (some of this information on defaults is also available on Trulia).
Realtors can send you homes that are for sale now -- or you can also find them yourself at http://www.REIL.com,
the professional site that is updated every 15 minutes.
Good luck! Let me know if you'd like to be blind copied on the list I'm already sending! I grew up in Palo Alto (on the Peninsula) and I have to say that I am not seeing homes at the $250K price point except in EPA and Redwood City. I'm seeing this price point in areas of San Jose like 95116 (downtown) 95127 (east side, but not in the hills yet) and 95122 (near Santa Teresa/Silvercreek) and 95111 (Senter Road). Santa Clara has one home for $385K. Sunnyvale had one for $399K but it's gone (listed last week). Cupertino had one foreclosure for $599K but it's gone. Los Altos had one foreclosure for $945K recently.
At the price points you describe, on the Peninsula, we're seeing homes in East Palo Alto and Redwood City for the most part.