The main difference between buying a foreclosed property (REO) and a conventional property is that the seller is typically a bank or lending institution, rather than a private party. Another difference is that because this type of seller does not usually have first-hand knowledge about the property, they can disclose to the buyer very little about it's present condition. Because of this, it's important to make good use of your "due diligence" period wherein you can perform a home inspection, or many other types of evaluations, to help you be informed as to what you are actually buying. REO's are almost always an "as is" purchase, unless funds have been specifically set aside by the seller for certain repairs, such as in the case of many of the HUD REO's. One of the last differences is that the sale process is much the same as a conventional sale, however in many instances an REO seller has a special contract they use from the standard Real Estate Purchase Contract. If that is the case, it is always a good idea to have it evaluated by your attorney before signing. Hope this answers your question!