When you submit your purchase offer for the REO you do not even need to deliver the check. You can make a copy of the check and send that along as proof of the deposit. If the offer gets accepted then you technically have 72 hours to deliver the check to escrow. Escrow will cash the check.
During the escrow period you will have a fixed amount of time known as the contingency period to perform your inspections and complete your own due diligence on the property. Your contingency period duration will be spelled out clearly in the purchase agreement AND any addendum that the bank will ask you to sign. Make sure your agent clearly spells out the duration of the contingency period with you.
If you decide to back out before the contingency period expires you need to cancel escrow, and once both parties have agreed to the cancellation escrow will mail you a check back for the amount of the deposit. It usually takes a few days after escrow closes.
One note, there is indeed little risk submitting an offer. However if it causes you stress then don’t do it. Do not buy a home if you are “iffy” on it.
