Pamela Haywood has spent the past 30 years driving BART trains. Now the 52-year-old Oakley resident is ready to retire and move to Texas. Six months ago, she put her home on the market for $1.1 million. She accepted an offer slightly below her asking price, but the sale fell through when the buyers were unable to sell their current home.

After dropping the price to $975,000 and concerned that the market isn’t going to improve anytime soon, Haywood is dangling a carrot that has been largely absent from Bay Area real estate transactions for at least the last decade.

She’s offering herself up as a piggy bank.

“This is really a down market,” said Haywood, who bought the 5-acre ranch property in 1981. “It’s the worst I’ve ever seen. A lot of lenders are no longer willing to lend to people who are not highly qualified.”

Seller financing has been around for decades. It was often used in the late 1980s and early 1990s when double-digit interest rates were a barrier for buyers. By offering lower rates or easier terms than traditional lenders, sellers were able to find buyers who otherwise couldn’t afford the monthly payments.

Seller financing is simple in theory: The buyer and seller settle on a price and then the seller agrees to extend some amount of credit back to the buyer. The loan is secured by the property. Typically, the seller provides financing in the form of a second mortgage after a buyer has obtained a first mortgage from a bank.

The California Association of Realtors has a standard three-page form that buyers and sellers use to put together the deal that lays out terms and conditions. The seller financing addendum also outlines the documents that a seller is entitled to examine before agreeing to the deal, such as a credit report and other financial statements that a commercial lender would typically review for a conventional mortgage.

A real estate agent can arrange the transaction, although sellers in some cases might want to consult an attorney or an accountant about the tax implications, said Heidi Rickerd-Rizzo, an executive branch manager in St. Helena for the Pacific Union-GMAC brokerage.

Such transactions usually appeal to sellers such as Haywood, who have owned their property for a long time and who don’t need a lump sum to buy a new, bigger home.

The Bay Area, which has one of the country’s highest concentrations of jumbo loans because of the region’s high home prices, may be poised for an increase in seller financing, said Mark Zandi, chief economist for Moody’s Economy.com.

“I expect to see more aggressive seller financing because the mortgage finance industry is in such disarray,” Zandi said. “The availability of credit has been crippled, and a lot of homes won’t be sold unless sellers come forward with some help for the borrower.”

Still, experts offered conflicting opinions as to how much of a comeback seller financing, which all but disappeared from the Bay Area during the go-go days of the real estate market, will make in the region. At least one Bay Area real estate firm is putting together a seminar to offer training to its agents on seller-financed transactions.

“We looked at what was happening in mortgage markets and we decided we could either sit back and hope it all turns out OK or we could get proactive,” said Matthew Borland, a managing broker at Zephyr Real Estate in San Francisco. “We chose the latter.”

As long as lenders remain tight-fisted, Borland said he expects to see an increase in seller-financed transactions.

“If what we fear happens and the credit market stays tight, you’re going to see more of it,” he said. “It’s never going to be as loose as it once was.”

Other agents agree.

Rickerd-Rizzo, the Pacific Union executive branch manager, agreed.

As she’s reviewed offers that have come in, said she’s noticed an increase in buyers requesting seller financing.

“We’re seeing offers written with it in there,” she said. “I really haven’t seen a lot of seller financing since early 1990s.”

This time around, agents say, seller financing is most appealing to Bay Area buyers in the middle-to-high end of the housing market, who are seeking the kind of jumbo loans that have become increasingly difficult - and expensive - for buyers. Rickerd-Rizzo counts herself among those buyers.

Instead of paying market rate - about 8 to 8.5 percent right now - for a second mortgage, Rickerd-Rizzo and her husband borrowed money from the seller when they purchased their Napa home last month. The couple paid $1.984 million for the house, securing an $800,000 mortgage from a traditional lender and splitting the balance between the down payment and a loan from the seller.

Rickerd-Rizzo said seller financing is a win-win. “Sellers are still able to push their price points, and buyers are getting interest rates that are lower than the retail market.”

How much interest sellers are charging varies, agents say, but in some cases it is as low as 6 or 6.5 percent.

But seller financing is not without risks. Frank Cannella, a branch manager for Prudential California Realty in Pleasanton, says such transactions aren’t for the financially faint of heart.

Should a buyer fail to make payments on a home, a seller who is holding a second loan on the home could potentially suffer, he said. “If the new buyer subsequently defaults on the first mortgage, the seller will need to take over the first in order to protect his investment,” Cannella said. “That can mean paying the buyers’ late fees, back payments, taxes, etc.”

As the credit crunch has shrunk the pool of home hunters, agents say that offering to help with the financing can reel in would-be buyers.

James Romeo Holloway, an agent at Zephyr’s Noe Valley office, is trying to sell a $1.339 million condo on Guerrero Street and has been advertising the fact that the seller is willing to carry a “large second” for the right buyer. “The owners have a lot of equity in the property,” said Holloway, who sold the home to the owners 18 years ago. “If it makes it easier for a buyer to come in, then we broaden our buyer pool.”

The tactic has drawn interest, Holloway said.

“Seller financing hasn’t be around for some time now, so many people - buyers, sellers, agents - aren’t familiar with it,” he said. “It’s nothing to be afraid of. It’s something that not only makes buyers happy because they don’t have as many hoops to jump through, but also can be really good for the sellers many times.”

Haywood, the aspiring retiree in Oakley, and her agent, Clayton Bowers, hope that offering financing will help sell her ranch property, which includes two manufactured homes, a barn, a horse-training facility and other buildings. There is no conventional home on the land.

Lenders, even in more generous times, generally scrutinize deals on manufactured homes more closely, according to Haywood, who said her situation is being made even more difficult by the slowness of the housing market in Oakley and other nearby communities in eastern Contra Costa County, where builders flocked during the market’s heady days. Now, those same developers are trying desperately to unload homes.

“The developers are giving very high incentives to try to move their product, so that’s caused the resell market to be glutted with homes,” Bowers said.

Haywood said she was approached by a developer, but the offer was too low. She’s hoping to find a buyer who can offer a $350,000 down payment. With a such a sizable down payment, she could structure a deal without any help from a bank, minimizing her risk.

“I’m looking to carry the first mortgage,” she said.

Haywood, who has put in enough years as a BART operator to have her pick of jobs and now works in the yards preparing the trains for the next day’s service, says such a deal will allow her to begin her retirement.

“I can’t retire until I sell,” she said.