Is this in Texas? There is a standard real estate contract which specifies the option period, earnest monies, etc. Sounds like they are asking you to drop all the buyer protections included in that contract.

I find the sellers demands completely unrealistic. Not sure what the market is like where you are looking, but my instinct would be to walk away now and look for an equivalent property with a seller that isn't crazy. If they had nothing to hide, they wouldn't ask for all this.