Firstly, how much has the seller got it advertised for ? If you are going to offer him $5.5K USD that to me equates to around £3500. Here in the UK, cars are very cheap due to various factors and 'generally' speaking, any E39 M5 which is priced perhaps £5500 and below is liklely to be a car that needs a LOT of work doing to it to really make it a good car again. There have been some instances of some M5 at this sort of pricing level and just a bit lower which have turned out to be 'good examples' but owners have then reported back soon after purchase with extensive preventative maintenence items/costs to help them with peace of mind with the condition of the car and drivetrain etc. So, with your thinking that you'll want to offer him quite a bit lower in equivalence, and the fact that in the USA, cars like the E39 M5 hold much more residual value in direct comparison to a UK car, it's even higher likely the car you are looking at will need significant amounts of spend in order to make it a 'solid' car. If you look at this forum, there are indeed a number of high mile M5's that are running really well, so it can be possible to run a very high miled example, but you'll need really deep pockets long term to keep the car running well. If not, and you neglect, there's a high risk it'll start to chew your wallet up FAST.
from there, have you been over to look at the car? have you enquired about if important aspects of the maintenence schedule have been carried out? DIY maintenence is a good idea, however these cars are complex units, and you'll perhaps need the assistance of diagnostic software, specialist tools as well as a good local independent specialist for jobs you simply won't be able to do just yet.
In short, as been said many times on this (and others) forums, it's easy enough buying the car, it's if you can maintain it well enough which is the real question.
2003 Ex-Police E39 530 Diesel Touring. Alpine White, 260,000+ Miles & climbing!
19" Hartge Nova 5 - with custom painted 'Flash Chrome' centres & Polished Lips (set of 5)
19" Hartge Nova 5 - Awaiting custom re-finish (set of 4)
19" Hartge Classic - with custom powder coated centres in shadow chrome & diamond cut/no lacquer lips (set of 5)
20" Hartge Classic - Awaiting custom re-finish
Full Custom Audio install - Arc Audio KS Mini ampliifers. DLS 5.25" 2 way front components & 4" 2 way co-axials. JL Audio 8W3-V3 subwoofer in stealth enclosure. Parrot Asteroid Smart head unit, custom door builds for DLS front stage & Earthquake SWS6 flatline subwoofers, custom rear pillar speaker pods. LumiDock iPod holder,
H&R Springs, ExoticsTuning front lip spoiler, Sport F/R bumpers upgrade, Carbon Fibre effect printed Vinyl roof wrap, High gloss black vinyl window trim wrap, Hartge bonnet/hood & tailgate badges, rear rooftip spoiler, matt Black kidney grille, projector foglamps.
Hartge auto gearlever, Hartge Handbrake handle, Hartge door sill strips, E46 M3 CSL Alcantara/Tri-stitch SMG steering wheel, full Black Leather Sport seats,
Custom ECU re-map biased for more Power & Torque in Steptronic mode, EGR delete, K&N induction kit, Stainless steel de-cat, Stainless steel exhaust backbox with twin oval pipes.
Plenty more modifications to come!