What a stupid remark. The fact the agent either let these people in or allowed them to enter is wrong and creates a liabilty for the seller. But has nothing to do with dual agency.
"The advice to repaint the house blood red is problematic as the walk through is supposed to verify the house is in the condition when the offer was made. This would create liability on you the seller"
This remark is just as stupid. The point was to either make a point about it now when the home is still the sellers, or just move on with it.
Ted, how about you answer questions in californina where you may be interpreted as a smart guy.
The agent may not have provided access BUT she certainly knows that this is highly inappropriate. Her responsibility now...is to put a stop to it!
This may need to be reported to the local police dept.
Close Escrow, keep the sale moving forward. Yes, your agent's duty to you has been breeched, but in the long run if you close and you are still not satisfied, then the courts or arbitrator will ask how you have been damaged. If you can't prove damages, it will be hard to get much recourse out of this bad situation.
If you don't close due to the buyer's breech and the buyer has waived all contingencies, then the liquidated damages clause will kick in if initialed by both buyer and seller, plus you will have the the ability to pursue the buyers in small claims for repainting.
The advice to repaint the house blood red is problematic as the walk through is supposed to verify the house is in the condition when the offer was made. This would create liability on you the seller.
Just an FYI - if your house was built prior to 1978, then who ever is doing the painting on more than 20 sq ft, needs to be a State-Certified lead professional verified through a CDPH lead-related construction certificate.
If you are that appalled and concerned with the situation, call the police. As of now you still own the house and did not give permission for the people to be in the house. Call the police. It is your right.
I see people in all situations wanting to stay in control and at this moment it is still your home, you can do as you wish. Go in and re-paint. you still own the house, paint it blood red. Make the point that you feel you need to make. otherwise, close the house next week and move on.
I'm sure, by now, you've already expressed your concerns to your agent and I hope a resolution has been achieved. Either way, you may consider posting a "notice of non-responsibility" for the work performed on the house. A simple internet search can fill you in.
Watch my 30-second TV commercial at: http://youtube.com/watch?v=-j9KBCLgUH0
Although you say the agent and buyers are friends the buyer may have gained access without the agents knowledge. Sense you trusted the agent enough to hire them I would suggest you continue to trust them until you can be sure they no longer deserve it.
Good luck soon your house will be sold and you will have the money and can mov on which is your real goal...