It must be heart-breaking to watch this little boy get so distressed. It must be terribly difficult to send him to his dad in that state. This is not usual behavior for a three year old. What you should do is take it very seriously.
However, it’s important not to jump to conclusions either. Maybe there is something frightening about dad or dad’s house. On the other hand, your grandson may have learned that he gets a lot of attention and cuddling and soothing from you when he melts down. In our efforts to comfort children, we sometimes inadvertently teach them that it pays off to be upset.
Before involving professionals, you can do a little investigative work of your own. The simplest thing to do is to ask the child and the people around him for information. When your grandson is calm and you’ve had an enjoyable time together, take him on your lap and ask him to please explain to you why he gets so upset. He just might tell you. You didn’t mention the child’s mother. Have you asked her what she thinks? If you have a positive relationship with his father, you should ask for his opinion as well.
If you can’t get anywhere with these conversations, or if you feel that even having such conversations will make things worse, you could encourage the child’s mother to take him for an evaluation by a child psychologist. Different states have different laws governing whether both parents need to agree before a child can be taken to any specialist, so encourage the mom to speak with her attorney to find out if she can make a unilateral decision. Finally, if you have reason to believe that this child is being hurt by his dad, you or the mom could call child protective services in your state to share your concerns and request an evaluation. To find the phone number, go to www.childwelfare.gov
I hope you will take steps to change this situation. Whatever the cause, this little boy needs some help.
I wish you well.