You should be having an attorney represent you in the transaction who will review the contract with you and advise you if you should sign it or not and what the risks are. If you are looking to get a mortgage, there should be a standard mortgage contingency clause in the contract stating that if you do not get the mortgage you will be given back your down payment (unless you willfully default or breach the contract).
Unless the homeowner is simply not willing to give you or any buyer a mortgage contingency. At times this can be the case but it is very rare. A seller who takes this stance is basically telling you that if you have any doubt about your ability to get the mortgage, don't buy my house. Sometimes a buyer may be so confident that they will get the mortgage that they are willing to take that risk knowing they will lose their down payment if they fail to get the mortgage. The only buyers who really can do this are people who go through an underwriting process with a bank to determine that they are 100% qualified to purchase. Even with that, there is still a chance that the buyer can be denied the loan if the bank appraisal comes up short of the asking price.
If you think this is a scam, the best way to protect yourself is to hire a great real estate attorney. Just agree to their terms and let your attorney review the contract. If there is anything in the contract you do not like, you can simply back out of the deal before you sign the contract. Once you sign the contract and send in your down payment, then there is no turning back.
There are many other factors that can influence this situation. If you need further assistance, contact me direct. Good luck!
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783