You submit an offer, it becomes a contract when everyone signs and agrees to the terms.
A REO is a bank owned home that the bank foreclosed on some time ago. REO means Real Estate Owned. You should be working with a Realtor that should be explaining all this since it is very basic stuff. You make an offer, the bank says yes or no and maybe gives a counter offer of what they want. You say yes or no and when you all agree you sign and the bank signs. At that moment it becomes a contract when you are notified they signed. Then you have to abide by the terms of your contract. It might say you have 7 days to do inspections, it might say 10 days, but it will say how long.