RUN AWAY. The guy is ripping you off. Big block E-bodies are somewhat desirable and he thinks with the 400 he can score big $$$. IMO, it isn't worth 5k, sounds like a 2-4k car to me.
Is the interior good (and I mean good) and all there. Interiors are a big expense. Seat recovering and foam can set you back $1k. Then door panels (finding good used ones) can run from $150 to $500. Headliner is another $100. If you could do the wrok yourself, no problem, if not, plan to add another $600 for someone else to do it.
Is the trim all there and intact? Does the trim looked hacked? Trim is starting to get crazy money now.
How much rust is there, really? Qtrs, floor panels, wheel house and qtr extensions, fender patch panels, these aren't too pricey per say, however the cost to do the repair is. If you can do it, then your cost is down, except for time and consumables. If you've done repairs in the past you know what you are getting into, if not then you will be scared a bit once you get started.
Oh, I almost forgot, electrical. Is the harness good or are they all spliced and hacked? Big money here to do it right, I think harnesses start around $350 and up.
You can use all this as info to base your buying price. If you really want the car, give him the info and say the car is worth $2500 to me, sound fair. Then work from there but DON'T get bullied into buying it. Leave your number and walk away.
Good luck. Also figure on what some minor repairs will cost you and see if you can find a car in better condition for the difference. I mean if you are going to sink another $3500 into the car to make it "good enough", perhaps you can find a decent car for $8500. I think you know where I'm going with that.