I found a 1987 Mercedes 300D turbo diesel 4dr at one of our local Honda dealerships yesterday on the back wholesale lot while driving through. It has 268K, dark blue w/tan interior. The car is 100% rust and dent free, but the paint has scratches and beginning to fade w/clearcoat coming off of the hood. The front seating has some splits on it, but the rear seats and carpeting in the entire car is still in good conditions. The salesman said on the phone today that the car belonged to a friend and he knows that the car runs good, but low on the appearance side. He said they would not set a car in that condition on their main used car lot and the car would normally be sold to one of their wholesalers if I did not buy it. He said for me to look at it and drive and it and make a reasonable offer and they would probably take it. He said he knew how much invested they had in it. I would like to offer $500, but do not want to insult. I hate for someone to say "make an offer". KBB trade-in shows the cars value at $775. So if they go by KBB- then they probably have $800 at the most in it. If the car runs good, should I mention to the dealer that I know the KBB value and offer, say $230. above that? That would be $1000. I am not sure about these cars- what trouble areas should I look for? I am just wanting to buy a economical car to drive to work for now, as my Lexus, Buick and Pontiac are gas guzzlers. Thanks in advance.

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2004 Toyota Sequoia Limited 4wd
1991 Lincoln Town Car Executive
1991 Cadillac Sedan DeVille
1988 Mercedes 300SEL
1972 Chevrolet Caprice Kingswood Estate 9-passenger wagon
1973 Pontiac Grand Ville
(Prior MB's: 1974 240D, 1985 380SE, 1984 190D, 1993 400SEL)