Because you place that money on the basis of a promise that you would honor the contract, reversing for any reason not described in the agreement means that the seller is legally authorized to keep your money. The short answer is yes, a buyer or seller can withdraw from selling a home. Usually, the buyer has more ways to withdraw from an offer, since it is rare and more difficult for a seller to change their mind. When a home is for sale, buyers are the ones who submit bids to sellers and their offers often include contingencies.
Each contingency has a time frame. Security money is essentially a bona fide deposit. He reserves the right to buy the house and, if he withdraws from his contract for no reason, the seller stays with it. While a buyer can legally withdraw from a housing contract, there can be consequences for doing so.
For example, you may lose your guarantee money, which could amount to thousands of dollars or more. There are some companies that offer cash-buying solutions that don't actually require cash upfront. If you're faced with a cash buyer who is lowering the seller's price, going beyond the asking price can be a way to stand out. This influx of cash can make an already difficult market even more difficult for homebuyers in need of a home loan.
The cash close process can often take three or more weeks, depending on the availability of third-party services. With cash, buyers can waive common contingencies, making the transaction smoother and faster (not to mention sweeter for the seller). A program like HomeLight Cash Offer can help you find the seller in the middle, presenting a cash offer but still allowing you to finance the purchase as a buyer. Offering all the cash can definitely catch the attention of sellers, but there are other ways to sweeten the deal if you're using a mortgage.
Often times, cash buyers come with offers below the asking price, largely due to the ease with which their transactions take place. There are still ways to compete and win the home you want, even against the most liquid buyers. Cash buyers are commonplace in today's housing market, but they're not invincible in any way.