A great way to get into Los Altos is to buy a fixer-upper. It can save you money over buying a turnkey home and get you into some of the best schools in the area. If you want to buy a fixer upper house in Los Altos, you need to know what prices make them a good deal. Just because a property is priced low doesn't make it a bargain. Also, as with many Los Altos houses, being "distressed" doesn't make it a deal. There may be issues that make the deal cost more than they're worth.
Optimum Prices - In most cases a home priced between $1,000,000 and $1,400,000 is likely to be a good deal relative to other homes in the area. If the home is a decent size, you can probably just remodel it without having to add more space. A fixer upper in Los Altos that is priced in that range and is 25-35% below the equivalent fully upgraded home is most likely to be a good deal. For example, a home priced at $1.3 million in a neighborhood with upgaded homes priced at $1.7 million is a good deal because it's about 30% under the market. Assuming the square footage and lot sizes are similar, the $400k difference can more than cover most remodels.
Location Is Critical - There are a few homes that have been on the market along busy streets, at corners, close to commercial space, and other challenging locations. Those homes carry a substatially lower value and it's reflected in the market. In general, a busy street or other bad location will shave at least 10-20% off the price of a home compared to one on a quiet street. Keeping that in mind, a property that is worth less as a fixer upper will still be worth less as a fully upgraded home. Even if you fix it up, it will be difficult to sell down the line. I advise not buying homes in bad locations regardless of how distressed or motivated the seller is. There are several examples of Los Altos homes in new or remodeled condition in bad locations that ended up going to foreclosure or short sales because the values stayed low.
Best Neighborhoods - The best Los Altos neighborhoods to buy a fixer upper in are those where the average homes are selling at or above the median price - about $1.7 million right now. Assuming you can get a home that needs work but doesn't need any additions to boost it's size, you'll get a great deal. However, keep in mind that the market is extremely competitive. Avoid overpaying for a Los Altos home just because it's at a particular price point. Some neighborhoods have smaller, non-conforming lots. If you see a fixer upper on an 8000 square foot lot and the neighbors have 10,000+ square foot lots, you will not get the same resale value they do down the line. A popular area for buy fixer upper homes is in central Los Altos where the lots are consistent and many homes have been upgraded.
For more details and specific examples using current homes for sale, call me.