They potential drawback is you forfeit control of the payment pattern and when you are ready to pull your credit you may be at the mercy of how much they owe. 

I state they forfeit all money received if they break the lease.

If they back out they forfeit the deposit.

They'd have to be a world class moron to deed the property to you, keep the loan in their name, and forfeit a $200-300k pile of cash that they will likely walk away with if they just sell to the open market.

If they don't they will forfeit their earnest monies.

Our tenant forfeited his deposit by giving insufficient notice, and then creating a lease violation that had to be paid for to correct...among many other damages he caused.So yes, you may end up in small claims court.

I'm just curious why buyers are resorting to longer escrows and forfeiting getting the best deal on their purchase today.

Only a few have claw backs in the docs, and the rare will step in and forfeit unilaterally (but rarely contractually) to try to make things right.

(ie, forfeiting future opportunity to go to small claims court if need be?)

I would seriously consider either a) not closing on it if you haven't already and forfeiting whatever deposit you have down (I think $1k?)