Palau's Chamber of Commerce says advertising on a Chinese website offering houses for sale in Palau complete with the right to live in the Pacific nation for up to 99-years is likely to be misleading.
The Island Times reported that the ad offers buyers a Palau Residence Permit as well as direct access to the US after one to two years.
It also offers an easy visa application process from Palau to other countries including Japan, South Korea, the Philippines and Taiwan.
However, the chamber's communications director, David Mason, said he was sceptical.
"Palauans through the Compact of Free Association with the US have access to the US and working in the US," Mr Mason said.
"But if you come to Palau and live here for a bit, that doesn't offer you the same benefits under the Compact as it does for Palauans."
Mr Mason says property values are rising rapidly in Palau and people are reportedly being offered suitcases of cash for their land.
"People literally come to them with a suitcase full of cash and then they just open it up and that's hard to say no to - then all of a sudden they've leased their land out for
50 years and they've got all of their money upfront and then don't have any money 20, 30 years into it", Mr Mason said.
David Mason said there are also rising concerns about money laundering, which Palau's Financial Intelligence Unit is closely following.