Yes, the Earnest Money Deposit that you should be putting up front normally will be forfeit since you most likely weren't able to close. 

I am hoping the seller will be understanding but curious if seller can back out from sale and forfeit my earnest deposit for this 3 day delay? 

If you're not willing to waive it and potentially forfeit the earnest money deposit.

If you could do that, then landlords would just put "I agree the landlord can force me to leave at any time for any reason, keeping all my money and I forfeit any right to dispute it in court."

At what point is the security deposit forfeited?

Do you just bail during due diligence and forfeit your appraisal costs?

As per their lease, any lease break forfeits the return of the security deposit and tenant is responsible for the remaining balance due to the end of the lease term.  

Since he missed the deadline of 21 calendar days, he has forfeited the right to deduct anything from my deposit from what I have read online.

You may get lucky and find a renter to pay that but most renters will just move out, forfeit the deposit, and leave you trying to chase after them to collect.

That and we need to forfeit the rat race and live the life we want on our terms.We intend to focus on small multifamily and then graduate to large apartment buildings.