I know some do not like Kelly Blue Book but...

Trade in on the car is $2325 - That is likely what the dealer paid

Private party sale is $3725 - More realistic

Dealer sale price is $5625 -

I think this is too high especially without records, crummy tires, tired floor mats and who knows what else at 175K and the above not being taken care of before they took pictures!!

I would make sure everything works, have whatever does not fixed, the tires and mats are replaced and offer $3800. They will counter at $4500 (if not walk), then settle at $4200 and hope for the best.

If this were a car being sold by the owner or someone on this forum it would be a different story.

Ask Turbodiesel if he still wants to sell his. It has more miles but at least you know it has been meticulously cared for

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1996 (W210) E300D 86K - Traded in for a Lexus
1992 (W124) 300D 2.5 Turbo 202K - Sold
1983 (W123) 300D, 146K - Sold
1970 280S, 263K - Sold - Beginning of addiction