You want to make sure that you do thorough inspection on the house to make sure you understand fully the condition of the home before you buy it
Bank owned homes do not come with disclosures or much documents and are sold "AS IS". - since they did not live in the house, so they can claim they don't know anything about the house. That risk is completely upon you.
Make sure you have a Realtor represent you and get a great comparable market analysis from the Realtor so you know fully that after you spent the time and money to repair, upgrade the house, it is still as good a deal as it seems to be.
Because... a big surprise .. sometimes REOs are not such a bargain after you figured in all the costs, but it sure can be a great deal!
Just make sure you do your due diligence.