Well, as long as you have an understanding with the shop that if YOU furnished the shop with the part, and it failed, that they would not in any way be on the hook for that.
Many shops, (the owners of shops here might explain this better) don't always like to install customer-supplied parts for this reason, and think that they should source the parts themselves, and receive a fair markup for their installation, on the parts, too.
I am a traditionalist and tend to go along with this. It's been debated here before (many views) but to me, it's like taking your own food and meat to ssome restaurant and asking them to cook it (to save you money), the idea of it makes me uneasy.
That said, what is the estimate you have for parts and labor on a shop you like for this job? Do you have it? IF, say for example, it is $500, is that $500
reflected in the selling price - or would it be reasonable to hammer the guy on the price some more? What about the damage to the hood - a new one is expensive - I think they are aluminum, could it be fixed w/o repainting?
I like the idea of the 300SE a lot. If you like a big W126 sedan, and don't need blazing performance but want all the benefits of one of the last years of them made (more equipment, like an airbag, ABS, mildly updated stying and interior seat patterns, etc. and the best economy of a gas engine, it makes a lot of sense.)
They are like the best kept secret of this series, the SE has the sexy close coupled sedan body look, and handles well and is not that tough to park.
They are better on gas than the 560 but the proce to get in is not sky high like with the diesels.
Then to the car itself:
Does it have records, and check out OK per the buyers guide on
www.mbcoupes.com ?
If everything works, it checks out, you like how it runs out, the PPI is OK, then I would buy it.
If you do, and do the water pump, you might also put in new coolant, belts and hoses at the same time. Might even be time to change the coolant anyhow. All this stuff will need to be disconnected to get to the water pump anyway, and just for fun, get an estimate of what it all might cost, either if you DIY (parts only) or what it would run if a good shop did it all at a reasonable price...
I mention it because by 100k yoou might need a new radiator if this is the original one, after 17 years, and the originals had unreinforced upper hose necks, that crumbled, so if you got a new radiator, the new ones by either Beher or Nissens come WITHOUT this flaw.
I'd fix all that stuff myself, then NO cooling problems to worry about.
The Transmissions and 177 hp inline six motor on these good looking cars make them a tempting deal for safe, comfortable, reliable, durable and pretty inexpensive running costs for a truly quality, luxury built and well engineered car that is beautiful to behold.
All I would add is a set of Euro lights to it and you would be golden.
You might take that figure into account when you figure on the price.
Also, even maybe a new radiator, too, as doing all that would cost something AFTER you bought it, so think about that repair figure too, when you think of price.
The only caveat would be this: Find out WHY the car is being sold with a unrepaired water pump; is this a red flag that the car was undermaintained and the owner can't afford to put proper maintenance into it? OTHER things might have been derferred or neglected too. You need to know. Check the records, talk to the mechanic, but find out.
good luck