Hi there! I work in the real estate genre in KS, and ALWAYS get an inspection if you are putting cash down, especially 3-5% or more, you will save a lot of time and heartache! If you are only putting down the equivalent of a security deposit, there isn't as much risk to you, but you do want to make sure you look around and make sure you don't see any black mold, or fresh paint on ceilings, etc...
Make sure you use official contracts, not ones he types up. You can pick these up at any for sale by owner shops...
If you have an agent friend in area, have them check the history on property to see how long on market, any pending sales that were cancelled, etc. Cancelled pendings could be a sign of a bad inspection?
Make sure all terms are specified. How long will he owner finance and at what %? Will it balloon after 1,2, or 3 years? If so, you really need to make sure you are in the position to secure traditional financing, or he can raise your rate down the road. You may want to get it appraised too, as if he is asking too much for home, and down the road it doesn't appraise as high as he is asking for, you will not be able to get a traditional loan without bringing more cash to the table (which is a waste, unless this is your forever home). Find out who will get the tax deduction!
It is normal for him to charge a higher %'age on owner finance, as he is carrying the "risk" on the loan.
There is less negotiation with owners when they are carrying the loan, but he should make repairs to any significant items found to the home.
Check out FSBO sites, and there is a checklist I am sure that is more detailed that you can make sure your bases are covered.
But VERY much buyer beware. There could be a reason it hasn't sold with a traditional buyer? But also, the market is so tough, sellers have to get more creative to get a buyer sometimes too.
He may be nice, but get EVERYTHING is writing. Good luck!! =)