Sorry to hear of your troubles. Are you represented by a realtor? A buyer's agent representing you should have presented your offer in writing and acceptance of the offer should also have been in writing. If they/you did and the seller did then it sure sounds like you have may have legal recourse. I would suggest speaking with a lawyer.
Then why does the offer state, "This is a legally enforceable contract, you should consider whether you whish to consult your attorney prior to signing the same."? Further, it states, (withing the lead paint disclosure contingency, "This agreement obligates the parties to sell and purchase the real property described herein... and the purchaser and seller have agreed to perform under terms hereof or any other terms and conditions subsequently negotiated."
No where in the document does it stipulate that the seller may continue to show the home, or may accept another offer.
How is this not a legally binding contract?
Further, we later discovered that the listing agent did not disclose that the seller was her grandmother, and that the competing offer was not only brought by the same agency, but from another friend of the family.
They may have acted within the confines of the law, but I may file an ethics complaint with the NYS Board of Ethics, as the agent acted in a manner that was "deemed untrustworthy."
So, it appears that I may have some recourse, after all.
I completely endorse the answer from Linda.anasta....If you were working with a Buyer's Agent, that agent could take further action up to the point where a contract of sale is signed by both parties. If your agent was a seller's or broker's agent, according to proper disclosure documentation, a better offer should be presented to the seller. In either case, both you and the seller would be in a better situation if full disclosure were used to ante up a better offer for the seller. This may not be what you want, but it is a method I've used effectively in this situation.
I warn all of my buyers that this type of situation can happen and does happen at any time and to go at top speed into contract to avoid it. It is unfortunate that Real Estate is done in this manner in Long Island and nowhere else. You have no recourse.