investing in foreign real estate involves a lot of risk, and what you don't know can really hurt you. When investing in Panama, it is critical that you understand the  the possible pitfalls in the purchasing process. Here are six common mistakes to avoid:  Mistake #1: Your real estate agent insists that financing will be no problem so you don't check with the bank.
Solution: Though individuals may have been able to get 95% of the property price financed in the past, banking polices and practices  have changed. Don't accept banking advice from anyone other than a bank representative. Be cognizant that agents may have ulterior motives or outdated experiences. Mistake #2: You choose the first agent you find in Panama, take his/her word on everything and eventually buy real estate without consulting with anyone else. Solution: Because Panama has no multiple listing service, the market has a poor flow of information and agents have the upper hand on buyers. Talk to multiple agents to hear multiple perspectives as well as property listings.Mistake #3: You assume that the price that you are given is accurate. 
Solution: Don't overlook the true selling-price of property. This goes for completed units, pre-construction property and raw land. Ask your agent what commission percentage they make on the deal to determine whether or not that might influence their decision on what to offer.Mistake #4: You deal only with an agent or middle-man, neglecting to contact the true owner of your property/project directly.
Solution: Always meet with developer/owner. In pre-construction, it's important to know who will be building your unit and if you can trust them to do a good job. When purchasing land or finished homes, it's important to learn the true price of the real estate to ensure that no one is pocketing a secret commission on the deal.Mistake #5: You purchase real estate in your personal name, thus subjecting yourself and your family to serious risk should anyone go after you legally. 
Solution: Consider buying real estate using a corporation: Panama is an offshore haven and buyers should take full advantage of that. Starting a corporation (it costs $1,000) and buying real estate in its name will serve two purposes: it protects you and your assets and it lets you transfer shares of the corporation to a new owner if you sell any or all the property.Mistake #6: You find a good development and buy a plot to build your dream retirement home. But suddenly, some crazy guy buys the adjacent lot and builds a giant purple house with a big metal gate fence, devaluing your property as it is forevermore “the house next to the crazy guy's compound”.
Solution: Verify with developers that the development has construction restrictions. You don't want attributes of your neighbor's property detracting from the value of your property, and if you have taste, chances are your plans for a house or fence will be approved in your development.