Buyer Beware of property purchased at housing auctions-

New policies being set forth by lending institutions such as Wells Fargo may have an affect on property being purchased at Bay Area Real Estate auctions. Now more than ever the service of a Realtor is so important. Make sure your represented when bidding on auction property. The fees to use a Realtor are free to the consumer. The Realtors fees are paid by the auctioning company. See below for the guideline changes.

Wells Fargo Policy for Properties Purchased Through Auctions – Effective 2/23/09

Effective with new registrations on and after Feb. 23, 2009, Wells Fargo Wholesale Lending will require the following polices on all purchase transactions if the property is being purchased through an auction house. These changes are necessary to control risks and help improve the quality and performance on auction property transactions.

Prior to Feb. 23, 2009, properties purchased through an auction did not have specific policy.

Auction Property Parameters Wells Fargo Policy on and after Feb. 23

Property Type

Wells Fargo will only finance the auction purchase of:

Single Family Dwellings (detached and attached)

Condominiums (excluding resort condominiums)

Established cooperatives (new construction cooperatives are ineligible)

Auction Terms: Buyer’s Premium and Auction Fees

The auction terms MUST be included as part of the purchase contract provided to the appraiser for review.

When the auction buyer’s premium combined with other sales and marketing charges or fees exceed 12% of the total purchase price the excess must be deducted from the purchase price.

If expenses for repairs will be reflected on the Seller’s Side of the HUD-1, the repairs must be fully documented including but not limited to contracts, supporting work orders or other acceptable documentation, in order to be excluded from the 12% cap. If documentation is not obtained, the fees must be included in the 12% cap.

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