Gazumping refers to the scenario where a seller accepts a higher offer from a new purchaser but had previously accepted a lower offer. It can also refer to the seller raising the asking price or asking for more money at the last minute, after verbally agreeing to a lower one. Unfortunately, this can happen at any point until exchange of contracts has happened. This is one of the reasons buying a house can be so stressful.
Once a completion date is set and you are packed away and nearly ready to move out, another purchaser could put forward a higher offer and the seller could accept without any legal consequences as nothing was legally binding. This could even happen on the day of exchange, for people who are in rented accommodation and who have ended their tenancy agreement could create major problems.
Being gazumped would mean that you not only lose the property you were looking to purchase but also any money spent on searches, surveys, mortgage applications and potentially legal fees. That is why it is always best to instruct a solicitor who is prepared to act on a no sale no fee basis.
Gazumping could soon be banned in a government attempt to reduce the stress of buying a house. They are currently collecting evidence by approaching Mortgage lender, solicitors and estate agents. Things such as a lock in agreement has been discussed to add extra security and trust to a housing chain.