My understanding is a bit different. You have a 48 hour cooling off period from when the contract is signed. This is for the buyers and you can pull out at any time during this, say if the property inspection is dire. After that, you and the vendors are locked in and they cannot pull out of the sale. If after the 48 hours the finance falls through or doesn't come through, this is pretty much the only way the prospective buyers can withdraw from the sale at a later point. The house then returns to the open market. Properties quite often fall through due to finance not coming through and this seems to be after the 48 hours cooling off, least when we were looking. A few properties went under contract, the 48 hours passed and it was a couple of weeks later the actual sale fell through.
Most people seem to have finance agreed and in place before they go house hunting, so know what their budget is and the lender has agreed to the amount so the finance isn't an issue. People do put in offers and sign contracts without finance being agreed and sometimes this backfires, sometimes it all comes through fine.
We put in an offer on a house but they accepted someone else's offer. A few weeks later the house was re listed for sale having been under contract stating failed finance. We had by then put an offer in on a different house but had it been re released a week before we may have asked them to reconsider our original offer.