Make sure your contract provides for the right to get an inspection, even if the property is purchased "as is". Also, make sure your contract provides for the right to get out of the contract if you are dissatisfied with the way the inspection turns out. There are two reasons for the inspection: (1) if the inspection shows that there are damages to the property that are beyond your budget to fix, you know up front to get out of the contract; and (2) if the inspector did not do a good job, you may have a cause of action against the inspector, if there were things missed in the inspection.
Get a lawyer who understands REO contracts
Most REO contracts are "take it or leave it" contracts. The Banks are not terribly motivated to make the Buyer comfortable with the sale, only to make sure that they can get the property sold. Make sure you have a lawyer who can explain what burdens you are accepting because of the non-negotiability of the contract. You should also understand that the sale may take place "in escrow" which means that you will not have the right to get your keys and get into your property on the date of closing - that won't happen until the escrow disburses.
Give the least down payment you can
Because the REO contract is often non-negotiable, it is important to leave the least amount of money at stake since the contract may provide that the earnest money deposit is non-refundable. There are instances where it is better to get out of the contract than to be burdened with the property for which you have signed a contract.
You are entitled to the property in the condition it was in when you entered into the contract
Many foreclosed homes are being stripped by vandals after the prior homeowners leave the premises. If the home you are purchasing is stripped after you have entered into a contract, you are entitled to the property in the condition it was in when you entered into the contract. To assure that you get the credit or replacement to which you are entitled, TAKE PICTURES when you go through the property. If you are not sure the first time you go through the property that you are going to put in a contract, go back for a second viewing and take pictures before you offer your contract.