I would say 25% of my contracts involve the seller needing post closing possession. The standard rent/amount the seller pays the buyer is 1/30th Principal, Interest, Insurance, Taxes or PITI. This amount is intended to cover the housing expenses the buyer incurs by allowing the seller to rent back. An escrow is also set aside from the seller's proceeds with usually 1% of the purchase price to cover any damages caused when moving out.
Some sellers have not found where they will move to or do not want to cram closing and moving into one day so post closing possession gives them a buffer. Post closing possession does need to be outlined in the contract or added later via attorney review. The buyer and seller do have to agree on these terms. Sometimes my seller client's want to add possession for peace of mind and in many instances end up not needing it or just needing a couple days.