The housing downturn, now permanently embossed with a "foreclosure" icon, is offering many the chance to buy when only a few years ago soaring prices had put owning a home well out of reach.

For many, buying a home still seems out of reach these days, although for different reasons.

J.P. Wheeler, a 31-year-old elementary school teacher, and his wife, Amanda, a Social Security claims representative, have been actively looking to buy their first home, going out to house hunt once or twice a week for the past four months.

Most houses on the market are foreclosures, and that's where the best possible prices appear to be, he said.

But there are also lots of people who see this as a good time to buy, he now knows.

The two have made offers - all over asking price - on three houses and have yet to get any of their offers accepted.

Their most recent attempt involved competing with five other potential buyers making their final, best offers on a 2,000-square-foot house listed at $280,000 in the Brookside area of north Stockton.

The Wheelers came in second with an offer of $335,000 - 20 percent above the asking price.

"I don't like to count my chickens before they hatch, by any stretch, but I thought that was a very aggressive offer," J.P. Wheeler said. "I was surprised it didn't come to fruition. ... It makes you scratch your head, wondering what more you can do."

Frustration perhaps best defines the feeling, he said.

"Definitely not anger," he said. "I understand banks are trying to make money, and I'm trying to get a deal."

Stockton-area real estate brokers and agents say that has become a common experience in recent weeks because of increasing competition among would-be buyers since banks began cutting prices on foreclosure holdings late last year, and sales have jumped five months in a row.

The dominance of foreclosures in the home-sales market had driven down prices brutally.

The median selling price countywide has declined from a peak of $425,000 in July 2006 to $220,000 last month - a 48 percent drop over two years and the lowest monthly selling price level since April 2002, according to figures from the latest Century 21 M&M report, based on Multiple Listing Service data.

The competition often feels intense and initially surprises would-be buyers, leaving them feeling as if they're in a bidding war, agents and brokers said.

"Cynthia Ruiz and her partner, Jesse Alonzo, recently bought a three-bed, two-bath foreclosure home in Stockton that they were able to get for $220,000, and they're happy, because they got a good deal.

But Ruiz said foreclosure property prices seemed to be set artificially low to boost competition and drive up offers. For example, the couple made an offer of $215,000 on a house initially listed at $185,000 but got outbid - a frustrating experience, she said.

"The starting prices are real attractive, but what they're selling for is more than they listed it for," Ruiz said. "It's very misleading."

Mian Quddus, a Santa Clara man who took a foreclosure bus tour in Stockton this past spring, had been eyeing houses in hopes of finding a good deal as an investment and, later, a retirement home. He found a couple of properties he liked but decided not even to make offers, because he heard there were already a lot of people lined up wanting to buy.

"So it didn't feel right going for it," he said. "I really didn't want to get into a bidding war."

Even the professionals looking for a deal are getting frustrated competing for foreclosures.

Jerry Abbott, president and co-owner of Coldwell Banker Grupe, Stockton, has been scouring the area for a good foreclosure house on behalf of his son and daughter-in-law.

He's looking in the $300,000 to $320,000 price range and offering $350,000 minus $9,000 closing costs, but the competition is so fierce that he's netted nothing with 10 offers, and three more are pending.

"I'm just writing offer after offer for them, and we can't get anything," he said. "There are a lot of people looking to buy in that price range, because those homes sold for up to $700,000 only a few years ago."

Sylvia Wong of Sylvia Wong Realty in Stockton represents several banks selling foreclosure properties in the area.

They usually set the price pretty low to encourage multiple offers, and it works all the time, she said.

Wheeler said he and his wife intend to keep looking for that very nice house at a very nice, reasonable price - an affordable home where they can raise a family.

"We're just going to keep plugging along, try not to get too frustrated and know something's going to shake loose for us," he said.

Strategy Advice

We have this advice for those hoping to buy a foreclosure home:

- Be realistic about pricing.  Many buyers aren't.  They want to get a deal, but the lower the prices are on the homes the more competition they face.

- Don't get carried away with the desire to get what you think is a great deal without considering the location and the condition of the property.  Usually, the price is dictated by the location and the desirability of the property.

- Study the property first because many foreclosure houses have flaws.  Banks are honorable, but keep in mind that they have never seen the property before.

- Don't assume you have to throw a high offer at a foreclosure to have a chance because in a "not-so-good" area you don't have to bid up.  In prime areas offers will have to be competitive.  There could be a house listed for $250,000 and sell for $311,000 that is very typical in a prime area.

- On prime properties, offers at 20 percent over asking price aren't uncommon.  If you can afford to buy a $200,000 house then you should be looking to bid on homes that are $150,000 so there is room to bid up if you need to.

- Not only are foreclosures sold "as-is", the usual termite and roof inspections aren't done by the seller.  Still, a buyer does get time to have inspections done after a deal is signed and then has wiggle room to get out of the deal if costly problems arise. 

- Forget putting contingencies in an offer.  NO contingencies are being accepted, period!

- Get pre-qualified for a mortgage loan before making any offer.  More often than not buyers neglect this step in the home buying process.

Many of the foreclosures are held by Wells Fargo and Countrywide, and they require that any potential buyer get pre-qualified with them, even though the buyer can get the actual loan from another lender.  It is very important to have your "i's" dotted and your "t's" crossed before attempting to write an offer.

- Be prepared to get busy and stay busy.  You need an agent who is very aggressive, and you need to be prepared to write multiple offers before actually getting one accepted.  What we see is that buyers usually write three offers before one gets accepted. 

- Because the banks are eager to get rid of these properties they are looking for the most solid potential buyer.  A higher credit rating looks better.  A bigger down payment looks better.  And so on.

In most cases a full-price cash offer usually beats a conventional, federally guaranteed loan, which beats government loans such as FHA or VA that may require repairs.

However, banks are making deals on lower-end properties involving many types of loans, including the Nehemiah home loan program, which offers down-payment assistance on an approved FHA loan of up to 6 percent of the selling price for a down payment, closing costs or both.  If you are only approved FHA, don't give up.  You can still buy a home.  It just may take more time!