Cash Buyer Appearing out of the ether at the last possible moment… is this normal?

We were the Highest Offer on a House. On Wednesday the Agent told us vendor was coming in to see them in hopes of concluding the sale and asked for our DIP to be resent.

2 hours later we get told a mysterious cash buyer has appeared offering £500 less than us. We raised our offer on Thursday by £2k. Got told on Friday that the cash buyer had raised again but were £1k lower than us so the seller was leaning towards going with them. I told the agent we can’t go any higher so we’ll have to walk away but it really seems so suspicious. We were the highest offer for over a week and no other interested parties were matching us because we were already offering £20k higher than listed price.

Is this a normal thing? I thought we were in a strong position because we’re FTB with no chain and a 10% deposit and ready to go. It’s so disheartening.