If it were all original, local sale, $750 to $900. Given its issues, $500. Lack of care in using the wrong decals, as repops of the correct ones are readily available.
With sellers this far off, I tend to wait. Sometimes they eventually come around. If you go look at it, rather than argue price, I tend to mention what I can afford to spend, along with a comment that it is surely worth more. "I can really only afford to spend $650 on this bike. Its worth more, so I understand if you don't accept my offer. Could you keep my number just in case?"
Never argue what the bike is actually worth. They have already decided that, you will get no where, and hey, its just an opinion in the end anyway.
And the issues, while they hurt value, do not affect ride or other factors. It just will always be somewhat capped value wise.
Personally, I would rather have a bike with worn, scratched up original paint and flaking decals than a repaint. Over the years, I have learned to appreciate "patina" more and more.