All liens against the property are removed once it becomes an REO, and taxes are paid.
Unlike properties at foreclosure auction, REOs can be inspected prior to contract, and are listed with real estate agents.

While many foreclosures are often in deplorable condition, REOs are typically restored to at least a readily salable condition by the lending bank.

The bank or lending institution that owns the property will often offer financing with better deals then they would offer on traditional properties.

The bank or lender that owns the property will often provide an allowance for certain repairs.
You can save money in your title search if you use the same title company that the lender used during foreclosure. They will often discount the cost up to as much as 100%!

REO properties are usually listed on your local MLS (multiple listing service), or can be located by going directly to your local REO bank’s website. REOs will often times include appliances

While in hot markets, you may not see a difference in price between an REO and a typical property, during slower markets, you can pick up an REO at discounts to the property’s actual value.

Note that lenders and banks do not like holding REOs on the books, and try to get rid of these as quickly as possible.