@Jason LiBuying with a loan in the first place is the most common way to avoid that.  

More I read, looks like this is very common with all new construction homes.

The 2 most common are relocation and increase in family size (outgrowing the home).

Everything is tenant paid except a common shared lights and stuff ($50/month max). 

Common roof deck w/ sweeping views, laundry right outside the unit.

We've been advised by our insurance agent that theft isn't covered on the builders risk policy, and every policy excludes theft during remodel or construction phase since it is too common and easy for fraud.

There are other passive options like opportunity zones, tenant in common structures or GP/LP syndications. 

Is this common practice?

Common sense would tell me to share; mostly concerned about liability, etc. 

Then you may be able to negotiate, if you can find out the reason why they're asking you to waive the inspection contingency you might be able to find common ground.For instance one property we purchased we came across a similar situation.