Problems financing a property purchased on Hubzu

[Gloria Mirza]

I'm in contract on a property that I purchased on hubzu and attempting to get a 30 year fixed rate conventional loan with 25% down.  The property appraised for 205k and my purchase price is 172k plus a 4.5% auction fee.  I am acting as the agent and buyer so I will receive 3% back as commission.  My lender is stating that they are using the base price of 172k as the purchase price and excluding the auction premium.  Has anybody had this problem before?  I'm using New American Funding.

I know I could buy with cash then do a cash out refi, but I don't want to do that because I'm already locked in at 4.25% and have already paid $550 for appraisal, all of which I would lose if I go the route of cash out refi.