Read your REO contract, it normally allows the lender to escape without any costs to them and also doesn't allow you to be reimbursed for your costs.
Of course you can pay the cost to hire an attorney to try to collect your $1,400 loss but it may cost you the same or more to get the $1,400 back and you may not have a legal chance of getting that money if your contract clearly spells out the lender's ability to cancel your contract at their whim.
Hope this helps and by the way, your agent couldn't have done anything to prevent this from happening so I wouldn't even think about assigning fault to her.
Contact a Real Estate attorney, but they may be weary also because this situation is one of the very "gray" ones we knew were coming.
Hope you find an acceptable solution.
And yes, this property is one of a kind. I work with dog rescue and need land away from other homes. They are few and far between in my price range.