If you have dealt with this seller before and this is the first time this has occurred (asking money up front then saying you forfeit if you back out) it may be that buyers in the past has stuffed this seller around. Not stating the terms up front before money exchanges hands is very rude and you have a right to be somewhat peeved. Personally I rather not deal with people like the one you describe. My view is that a buyer has the right to back out of a sale