"Schools are extremely important when selecting an area to live. It is most often the number-one criterion for buyers in deciding where they want to live," said Jan Gallagher, with Coldwell Banker in Los Gatos. "Buyers are willing to sacrifice for a smaller home."

Gallagher, along with her Realtor husband, Tom, works mostly in the Campbell, Los Gatos­Monte Sereno and Saratoga areas, where she says there are excellent schools. However, she is quick to point out, not all of Saratoga is in the Saratoga school districts. Some homes are in the Campbell district and others are in the Cupertino district, even though the city address is Saratoga.

"The first question asked of us at open houses is always 'What school district is this home in?' Prices reflect the different districts dramatically," Gallagher said.

She believes many educated buyers now rely on the California Academic Performance Index (API) test scores that are reported yearly in October by each school district. "The higher the API score, the higher the home prices will be," Gallagher said.

For Realtor and parent Andy Wong, the subject of schools and real estate is one of his favorite topics. He said the easy answer is that homes with better schools are higher priced, but he thinks there is much more to it than that. And, he doesn't believe test scores should be the only measurement.

"I've worked with clients who were willing to sacrifice square footage, lot size and even bedrooms just to buy into the best high school district for their 2-year-old child! This may seem a little extreme, but consider the cultural values that are driving these decisions," said Wong, who is with Alain Pinel Realtors in Los Gatos. "Many people come to the United States to provide a better future for their children and believe that a good education is a pre-requisite to success in life."

That's why so many people place paramount importance on the quality of schools when selecting a home. "If one subscribes to these values, then homes in the best school districts are worth the premium that they command in price. As a Realtor, I understand and respect these values," Wong said.

Wong believes there is a dark side to this belief, since not all parents who subscribe to these values can afford homes in the best school district. He tells his clients that education is not the only path to success in life.

"Some of the most successful and wealthy people I know attended less prestigious schools than me. Yet they are doing much better in life than some of my fellow alumni from MBA school at the University of Michigan, engineering school at UC Berkeley and Lowell High School in San Francisco, considered one of the oldest prestigious public schools in the United States," Wong said.

The bottom line, in Wong's opinion, is that a school that doesn't have the highest standardized test scores can still provide a success-oriented education to its students. For example, Wong finds that leadership, diversity and other people skills are the most valuable skills for executives in today's global economy, and he believes they can be learned at any school.

Realtor John Leslie with Alain Pinel Realtors has worked for 16 years in the Los Gatos area. He said the price of homes in various neighborhoods has often been tied to the Los Gatos schools' value.

"The buyers who insist on Los Gatos schools expect to pay more, perhaps 10 to 20 percent more depending on the price level, to stay in the district. Other buyers who want more square footage for the money minimize the school-value issue," Leslie said.

For those parents who are concerned about the school district, Realtor Jim Meach of Alain Pinel Realtors in Los Gatos advises buyers to do their homework.

"School districts do not follow city, ZIP code or other boundaries. School districts have their own boundaries. Often homes on one side of the street will not have the same schools as on the other side of the same street. You can have a home in the town of Los Gatos with a Los Gatos ZIP code but go to Union schools," Meach said.

Meach recommends contacting the school for availability as well. "Just because you live in the district does not always guarantee you that your child will go to the school in your district. You must check availability for your child's specific age and class with that school. Registering as soon as possible and checking with your school is important," Meach said.

In addition, Meach recommends checking out websites such as www.greatschools.com to find statistics on schools, including test scores, teacher-student ratios, ethnicity, affluence and more.

"Schools do influence property values. It can be seen in values of homes for sale as well as rental prices. It is also evident in the limited amount of listings and lower vacancy factor in areas with highly desired schools. Homes in a more desirable school district generally tend to sell quicker, with a larger pool of buyers," Meach said.

"People live in these areas because they want to, not because they have to. In areas without high-ranking schools, you can get more bang for your buck or more home or lot for your money."