Gentlemen, can I have your advice please?

Last year I sold my 2003 TD5 and I've regretted it since so I'm on the look for another but one has presented itself which I'm considering how much to offer.

It's a 2001 51 plated GS in silver, 87k with some history. It failed it's MOT in April 2015 on rear chassis corrosion, braking issues including handbrake and a few trivials. The owner's had it since 2009, replaced the clutch, rear suspension air bags and the power steering pump with a reconditioned one.
It starts, sounds healthy enough and the gearbox works, ABS sensor lights up and I'm pretty sure it needs a new fuel pressure regulator judging by the smell of diesel under the bonnet. There's no mayo in the oil cap.

Of course I have asked how much he wants for it. He knows he will have to spend money on it but my guess is that he doesn't want to.

"Make me a sensible offer."

It's dry inside, got good quality tyres and it is very clean.

Start at £500 and be prepared for £650?
A mate said he can cut out the rotted rear chassis and repair with a new complete section. Most of the rest (except the ABS light) I can do myself.

What do you think gentlemen?

I just bought one similar.i cut off rear end and welded on complete rear section.but check for rust further on.up inside rear spring mounts and bend on chassis in front of rear wheels.also check body mounts.then make your offer,i paid £890 and im happy with that.

Check the oil for smell of diesel. If you can't get aa proper oil reading, then maybe diesel in the oil.