While I agree that agents should RETURN CALLS, it may not be so cut and dry. In addition, I agree that an agent should state honestly if there are offers on the table, (or should tell you they won't tell you which is what some bank foreclosure agents do)
You said that they took another unapproved offer and told you that you could not submit an offer until you were approved. First, how do you know that the other offer was not pre-qualified/approved? I suggest that buyers I work with get pre-approved before we ever even find the right house. This allows them to jump fast if they find something the LOVE. Second, the agent is REQUIRED to present all offers to the seller unless the seller tells them not to. So, If the listing agent has an offer they received in writing, they must present it, and the seller gets to decide (with the advice of the agent) what to do with it. It is difficult to know exactly what went on.
It is hard if not impossible to speak to the ethical or unethical behavior of the agent with the information available. Your agent would best be able to gauge that information. I do think that it is a lack of professional courtesy that your agent cannot get phone calls returned.
I hope very much for you that your buyer's agent is very assertive, and will get to the bottom of this for you. I understand the disappointment you and your family are feeling with this, your dream house.
I can also tell you to have your agent keep watching what is going on or consider submitting a back up offer for the house. If your agent submits a back-up offer in writing, then the listing agent will need to present it to the seller. If this deal does not work out, you will be next in line. Many deals fall apart for various reasons. In particular, if the other buyer is not qualified to buy the house as you think, it will fall apart anyway.
You're agent should be able to suggest the best course of action.
Garrett Realty, LLC
Your agent is in possession of more facts than we are, so you need to ask them. If another offer was in process before yours arrived, it's possible. Where the owner and you already tried to do business and your previous loan was declined, they may be hesitant to try again.
If a home is contingent, meaning contingent upon sale of another property, in many cases that offer can be bumped by one that is non-contingent. NY has very different practices than my area, so I'm going to refer you back to your agent or their broker again to find out exactly what options you may still have.