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REO properties can be good investments, provided you go in with open eyes. Typically, banks prefer cash deals & quick closes, but most do consider conventional and even FHA/VA financing these days (depending on the condition and/or level of rehab they have performed). All banks are different as well. Some will consider one offer at a time, and some will wait until they have a few in hand, stipulating a deadline to submit your "highest & best" offer by. Just know that the really good deals will go fast and usually by investors/pros "ready to pounce" with cash. If you have cash or access to hard money, your options and potential for better deals are greater.
This is true because, 1.) Cash is (still) king. Banks will give more consideration to your cash offer (and quicker close), even if it's less then an offer from a buyer requiring financing. 2.) You are not bound by financing/appraisal/occupancy cert. contingencies and requirements. This means that you can purchase an REO that needs a little work (that's not eligible for financing) much cheaper than when the bank dumps rehab $$ into it and increases the price.
The corollary to that is that most banks will not make repairs if/when requested. Sometimes they will consider seller credit in lieu of repairs, but typically only for "warranted" items (like plumbing, HVAC, etc.). Basically you are buying an REO "as-is" (and will be signing contract/lender addendums stating such). Another thing to keep in mind on REO purchases is that you will not receive any prior info or seller's disclosures on the property, so due diligence is key.
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