While you might have a legal right to seek reimbursement on your expenses from the seller, the chances of collecting these monies might be fruitless if the party lacks the ability to pay. You could throw more good money after bad, unfortunately.
Some states set up a fund to protect buyers and sellers in the event of claim against a licensee. Check with your state to see if that is true there. Before pursuing that route........
Contact the broker where the agent works. The broker may be able to help you work out a solution.
Most agents and brokers carry errors and omissions insurance, but there are several acts that are not covered by E&O. The purpose of E&O is to protect both the consumer and licensees from mistakes and oversights. From what I read above, this may not be covered by E&O. Policies vary and more detail could alter the situation. It's hard to tell you it if insurance would or would not cover you. My purpose is to outline avenues to pursue and do further research.
Contact the REO dept of the lender who foreclosed for updated status info. I recommend using a buyers agent to do that. The bank is going to look out for the banks interest. You need an advocate who is totally dedicated to your side.
I'm so sorry to hear of this! If it makes my head spin, I can't imagine what you're going through! Please clarify a few things... I understand that the owner of the home was a real estate agent, but was he acting as your buyer's agent as well? Did you have a buyer's agent representing you in this transaction? Does your attorney specialize in real estate law? These are some very hefty legal and ethical issues. Any advice you may receive here, will give you a general take on the subject; but you must consult a real estate attorney. As for getting the house you wanted to purchase: get yourself a good REALTOR to represent your interests as a buyerâ€™s agent (I'm assuming here that you don't already have one); ask friends, family and colleagues for references. Have your REALTOR call the bank directly (it may take a while to get to the right person) and explain the situation. The bank will probably be thrilled to hear from a prospective buyer with so much vested interest in the property--they don't like owning property--it's not their business specialty. Lastly, let me ask; was the property owner a real estate agent or a REALTOR? A REALTOR will use the capital "R" logo (copyrighted--that's why I have it in all caps), usually in blue, in his/her business cards. I ask because REALTORs which belong to the National Association of REALTORs (NAR) are held to higher ethical standards. Again, I am so sorry... Please re-post...
To find whether the property was scheduled for auction and whether it really got sold it's easy. Just go to the Illinois Foreclosures Listing Service, http://ilfls.com, and search by address. Also even if the property is sold back to the bank it still doesn't mean it'll be approved by the court.
However, in this day and age with foreclosures, there is probably a first and a second mortgage (lien) on the home. If the first mortgage company foreclosed, than the second mortgage company is out of luck. However, if the second mortgage company foreclosed, they have to pay off the first mortgage company in order to own the home. The seller may have been trying to sell you the home for the first mortgage amount. What you need to do (in addition to talking with an attorney) is research. Here are some places to start: http://www.ccrd.info/CCRD/controller
Find out everything you can about the property and the seller. Chances are that the closing was canceled because it was too big of a headache or wasn't worth it financially. People more experienced and less emotionally vested than you probably decided this would be a situation of throwing good money after bad. But they most likely didn't give you all the information so that you could make that decision yourself.