I would offer $100 less because the rust is a sign of severe neglect. Especially on a pistol made of stainless steel! It may have been submerged in salt water to do the kind of damage you mentioned.

If they drop the price and purchase you can try having it blasted with an abrasive media followed by blasting with glass beads and you might get it back to the factory look. If the blued portions of the front and rear sights are rusted as well you could try refinishing those as well but it would be cheaper and far easier to replace them.

Figuring these costs of "repair" into the price of purchase will help you evaluate whether it is worth the cost and effort.

If you purchase, pleas post before and after photos. :-)