$4K is way too much money for a "project". Runs and drives is nice, needs all the creature comforts and pretty much a suspension rebuild? Knock off $1500-2000 right off the bat. #14 head drops its value too, but I wouldn't put much concern on it unless it shows the symptoms of cracked head, uses coolant, or has oil in coolant. High miles is another price reducer. Lack of demand is another value reducer in your favor.

Offer $1500 and walk if he turns you down. You have a lot of tedious work to address all the issues you list. If you have more money than time or common sense, it's worth whatever you want to pay for it.

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Current stable:
1995 E320 149K (Nancy)
1983 500SL 120K (SLoL)

Black Sheep:
1985 524TD 167K (TotalDumpster™)

Gone but not forgotten:
1986 300SDL (RIP)
1991 350SD
1991 560SEL
1990 560SEL
1986 500SEL Euro (Rusted to nothing at 47K!)