The Down Payment: In today's market many banks are asking for 20% down; offer less and you'll probably have to pay for private mortgage insurance, which adds up to half a percentage point to the loan. In seller financing, the buyer can put down less than 20% without the PMI.

The Interest Rates: Most private sellers charge slightly above market rates since they're shouldering more risk particularly if their would-be buyer got rejected for a bank loan. But with home prices still in the tank, some owners are offering lower rates to buyers who agree to meet their price. And keep in mind: Most seller-financed deals expire in five to seven years, 15 at the most and finish with balloon payments.

Due diligence: When there's no bank involved, title insurance becomes even more important. Usually available for a few hundred bucks, it digs up tax liens and other claims that could affect a property transfer. A current appraisal, credit report and background check are also smart moves. After all, there's no institution behind this deal it's just you and the other guy.