I sell over 100 REO's a year and I doubt that the seller is requesting that you waiver your contingency/inspection period. However, if they are I would not do it because there could be serious issues that you are not aware of. If the property is on septic and the system failes it will cost $3,300+ to repair/replace it. Did you ask the listing agent if they have completed any inspections like termite, septic...etc already?...that could help your decision.
Never waive your contigencies, you at least a minimum of 7 days to do inspections. Always due inspections, you need to know what's going on. The banks never lived in the property you are interested in, the previous owners' never left a list of what is the present condition, what works and doesn't work.
Jes Sierra, B.Sc.