Fueled with free doughnuts and coffee, 28 people queue for a bus tour leaving West Dundee on a recent Sunday morning. Another two follow by car so they can duck out early to catch the end of the Bears game. By 1 p.m., the group tours nine foreclosed homes in East Dundee, Elgin, Lake in the Hills, Sleepy Hollow and West Dundee.

Hosted by Tanis Group Realty in West Dundee, the tour gives potential buyers a chance to see multiple foreclosed homes in one day, while learning how to buy them. Some are homes acquired by the Department of Housing and Urban Development that are on the market because their owners defaulted on their Federal Housing Administration mortgages. Others are real estate-owned homes that have been repossessed by lenders. All are for sale "as is," at market value.

"Buying one of these homes is very different than a conventional home purchase, so a big part of our job is education," said Tanis real estate agent Doug Kowalewski. Buyers submit bids, then pay cash or line up their own lenders.

Like Tanis' first bus tour earlier this year, this one includes a mix of first-time buyers, property flippers and experienced or wannabe landlords, ranging in age from their 20s to 70s.

"Some know how to buy foreclosed homes, but others are just learning," said Kowalewski.

Making bids

"We're looking for a house for ourselves," said Lucia Lopez, a phlebotomist on the tour with three family members. "Elgin would be ideal to be close to our jobs, but another town nearby is OK if the price is right."

Although Kowalewski said foreclosed homes are not for everyone because they range from run-down to downright awful, Lopez's family looks beyond the flaws as they power-shop. The men in their family are itching to get started on remodeling, said Lopez's mother, Gloria Vera. "They love it, especially the demolition part!" she said.

"Nice yard, newer roof, but too small," said Vera of a two-bedroom ranch.

"This might work," said Lopez of a two-bedroom two-story. "It doesn't have enough bedrooms, but we could put some in the basement."

Lopez does not bid on a home but said it "taught me what you get for your money." Later that day, bids on a four-bedroom, $70,000 Carpentersville house that Kowalewski shows her.

"It has room for all of us and a big yard," said Lopez. "It just needs new flooring. If we don't get it, we'll find another one now that we know what we can afford."

Gricelda Morales joined the tour to find an income property. "I have one house that I fixed up and rent out," said the college student from Woodstock. "That one needed a lot of work so I couldn't rent it out for six months. This time, I'm looking for one that needs less work so I can get rent quicker."

Morales bids on two homes in Elgin — a 1980s two-bedroom condo listed for $40,000 and a 1930s one-bedroom house for $31,000. "One needs new flooring, but the other just needs paint and carpet cleaning," she said. "If I don't get these, I'll keep making offers. You have to be patient, but if it works out, you can get a home that gives you rent money."

In addition to Lopez and Morales, a seasoned investor from Elgin bids on a $90,000 Sleepy Hollow house.

Advice for buyers

Between stops, participants get home-buying tips from Kowalewski, Schaumburg-based mortgage banker Jerry Mlinar and Crystal Lake-based attorney Rachel Moreau Newby, all specialists in foreclosed properties.

"For most people, the biggest hurdle is credit," said Mlinar. "After that, it's fear and uncertainty. They've heard that loans are hard to get, but there are a lot of options."

He tells the bargain hunters how to get an accurate credit report and when to get a "rapid rescore." He defines realty terms such as "clear to close" and "rehab loan."

Many buyers of distressed properties use the FHA's 203k loan program to finance repairs, said Mlinar. If a property is in an area defined by the government as rural, the buyer may qualify for a mortgage from the U.S. Department of Agriculture.

Kowalewski explained how the government sets the prices of HUD homes and their price range.

"One may be off the mark so it doesn't get any offers, while another one may be a great deal and generate 20 offers the first day," he said.

For those shopping for rental properties, Kowalewski warned that more municipalities require novices to take landlord classes and get landlord licenses.

"Consider the timing of your purchase because the seminar may just be offered quarterly," he said.

Team with an attorney who understands foreclosure purchase pitfalls, advised Moreau Newby. "They require a lot of deadlines and letter-writing," she said. "For most buyers, it's daunting. Do it wrong and you may lose your earnest money."

Compared to conventional home purchases, "the burden is on the buyer to research things like liens and unpaid HOA fees," said Moreau Newby. "Your attorney can make sure you have it all covered."

Bus tours are part of her marketing tool bag, said Marki Lemons-Ryhal, a real estate agent with Keller Williams Realty in Chicago's Hyde Park neighborhood. She has hosted 15 in the last few years, each preceded with a how-to seminar.

Lemons-Ryhal said her tours draw 20-plus people and usually result in purchases.

"Many buyers today have credit problems," said Lemons-Ryhal. "So we start by helping them with that. In the meantime, the tour gives them realistic expectations. With these properties, you get what you get, and it's not always move-in condition. One house may have a new kitchen but no furnace, for example. And, you have to be able to deal with delays beyond your control."

The properties on her tours range from homes for less than $30,000 to six-figure two-flats that, "with some alterations, make nice single-family homes," she said.

Enlist help

Don't go it alone, Lemons-Ryhal tells buyers of distressed properties.