Listed the house for under market Sold it on the first day
There is nothing wrong with that. Your parents had the option to demand the realtor list it higher and also had the right to decline the buyers' offer.
When my parents wanted to show the contract to a lawyer she told the trust me\
Your parents had the option to still show it to an attorney. If the realtor stated "trust me" in exactly the way you wrote this, s/he did nothing legally wrong (although it's not the most ethical thing to discourage the gullable from seeking advice). Now if the realtor acted in a capacity of actually giving legal advice and is not a licensed attorney, there is a legal issue to pursue.
Told my parents to clear out all furniture before selling it
There is nothing wrong with that. Perhaps the realtor thought your parents' furniture is unsightly and thought it would be more presentable with the furniture out. That's the only justification I can think of. Usually realtors want the house to be furnished as staging is easier and makes the house more attractive. Potential buyers can more easily picture what it is like to live there.
Listed it as a handyman special Old fashion house on a nice street Did not tell my parents
There is nothing wrong with listing it as a "handyman's special old-fashioned house on a nice street." That's code for, "this is a nice area to live in, but this house does need a lot of work." Your parents could have asked to preapprove the listing.
Took 3k from the buyers as a down payment The buyers current house is about to be sold
for back taxes
Was the $3k put into a realtor's trust account? If so, what is the issue? What is the relevance to your parents that the buyer's current house is about to be sold for back taxes? Is the "down payment" nonrefundable? If so, then your parents should get it if the buyer backs out, unless it is because of matters specified in the agreement that would allow the buyer to back out. Failing inspection because of an asbestos issue could very well be a good reason to allow the buyer to back out and get the deposit back. If the buyer backs out because of failure to secure financing, then your parents are likely entitled to the deposit. You'd have to read the contract to know for sure.
Did not explain to my parents there was an 11k seller giveback
What does this mean? Are you saying the seller is to give back $11k as an allowance for repairs?
Is this enough to after the realtors license
Bottom line - I am sorry for your parents' situation. However, unless they are deemed legally incompetent, they entered into a contract without either reading or understanding it. Even the most naive would know better on something as major as a home sale.
If you believe the realtor acted unethically, report him or her to the state's licensing board. If the realtor did something illegal, hire an attorney.
I am not a fan of realtors. Most do seem to care only about the commission; good realtors are difficult to find. I am especially not a fan of anyone who would try and take advantage of an elderly couple's naivety. However, again, unless your parents are legally incompetent, I do not see what you can do at this point.
As for the contractor, as long as he fulfilled the terms of the contract and did not cause damage to the home, I do not see what he is liable for. You indicate it is an old home but do not give specifics. If it is truly old, then asbestors may be one of the very things an inspector would think to look out for.