The trading watchdog is urging almost 120 firms operating across the "quick house sale" sector to make sure their business practices are up to scratch.
The warning comes after an investigation found some hard-pressed customers end up handing over their home for less than half of its market value.
The Office of Fair Trading (OFT) said it has also opened formal investigations into three un-named businesses for alleged unfair practices that may have led to some customers losing tens of thousands of pounds.
People who sell their homes to a quick house sale firm usually receive between 10% and 25% less than the market value of their property in return for getting fast access to cash.
But concerns have been raised about firms reducing the price offered at the last minute when the seller has already committed to the transaction.
The OFT said it has seen firms dropping the prices they will pay by up to 53% on initial offers which were already below market price, leaving people tens of thousands of pounds out of pocket compared with the market value.
The average quick sale is estimated at around £100,000.
The regulator warned that some firms risk giving the industry a bad name by exploiting a customer's difficult financial circumstances and giving them significantly less than they were expecting.
It said seven in 10 complaints received by the OFT about quick house sales came from "vulnerable" consumers who may have been particularly attracted by claims of a hassle-free service, with no viewings or hold-ups.
These include older people who may be suffering ill health, people who are heading for repossession and need a fast route out of their debt problems and those who are under pressure to stop a property chain collapsing.
Gaucho Rasmussen, OFT Director, said: "Responsible quick house sale firms offer a valuable service to consumers who want a fast sale.
"However, we have also seen potentially illegal behaviour and as a result the OFT has opened investigations into three companies.
"When sellers get a bad deal, they could lose a lot of money. We want to ensure that consumers can have confidence in this sector and put an end to these shoddy practices."
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