There are some legitimate real estate investors who specialize in purchasing homes in distress and helping owners prevent foreclosure. However, there are others who prey on homeowners in distress. Here are some examples of unscrupulous tactics to avoid: 
Signing The Deed Over To An Investor This is a particularly troubling practice that investors engage in typcally referred to as taking over a property 'subject-to' existing financing. There are very few situations when a homeowner's best option is to sign over a deed, however this is not the case with most short sales. When you sign over the deed of your home, you no longer have any legal rights to the property, however, the mortgage is still in your name. Signing A Power Of Attorney This is essentially the same as signing over the deed. By giving someone power of attorney, you give them legal rights to sign any documents on your behalf. The power of attorney gives the legal authority to make decisions and sign documents without your further consent. Creating Issues With A Property Intentially damaging a property in any way in an attempt to collect compensation in the form of insurance, or to get the bank to go along with a short sale is fraud. Getting Cash Back At Closing The lending guidelines have become more strict given the current economy, and the rising number of foreclosures. In any real estate transaction, it needs to be made clear that a homeowner or purchaser getting cash back of any kind that is not disclosed on the HUD-1 Closing Statement is fraud. 
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