My colleagues already provided great answers. There are few more I would like to add regarding the differences between a regular resale and a REO sale( which is also a resale, by the way, since the bank already owns that property):
-many times the REO's are listed bellow the market price and that leads potential buyers to believe they can get a bargain and multiple offers are in order;
-when a bank issues a multiple counter offer, you don't know where you stand and what your competitors have offered. Instead of a number figure, your counter offer will sound like this: 'MAKE YOUR BEST AND HIGHEST OFFER' ;
-because banks are notoriously bureaucratic institutions and your final purchase contract will have to go through a lot of departments, the initial negotiation will be done mostly through the email. Once the terms are settled, the bank will draft the final contract documentation;
-on a plus side, a lot of banks-sellers offer credits toward closing costs and if you choose their escrow and title company( which if you are in California, will be located in Southern California most of the time), they may pay for your escrow and title insurance.
I hope this helps.
Alina Aeby-Broker Associate
Pacific Union International