The estate agents under investigation are accused of setting the asking price of properties at half their true value to stimulate buyer interest and ultimately to force the price upwards. If the Advertising Standards Authority (ASA) upholds the complaints it could force all agents to change the way they advertise properties.
A spokeswoman for the advertising Watchdog confirmed they were examining examples of agents setting asking prices that are misleadingly low.
If advertisers continue with the practice the Watchdog would refer the issue to the Office of Fair Trading (OFT). It has the power to impose huge fines and to order firms to comply.
It is said that this could change convention in the Scottish property market.
The investigation has highlighted the potential pitfalls of the Scottish blind bidding system whereby purchasers can be bidding way over the mark for properties – increasing the risk of clients being duped.
A recent survey by the Clydesdale Bank found a quarter of Scottish buyers favoured introducing the English system, which avoids blind bidding.
Carl Melvin, managing director of Glasgow-based Millbrae Financial Services, said the blind bidding system should be stopped. “Recently one property had been put on the market for £65,000 but was actually worth £165,000,” he said. “It’s a ploy to get people to start a bidding war. Something needs to be done to protect buyers. It is particularly damaging for first-time buyers.”
An ASA spokeswoman said it would contact the firms involved for comment before passing the issue to the Watchdog’s council. A decision is expected in three weeks.
