Mike, since it's a bit of a mongrel then the chap should sell it to you at a good price, tell him that even though he was cheated out of $3,500 you like his face and are consequently willing to redress this imbalance by giving him the original purchase price and $500 for his trouble!
Just yesterday one of my old racing buddies came over to my place with a 1965 Triumph Bonneville in the back of his van. I have been trying to buy this off him for years, he has finally decided that it is too far gone for him to tackle and consequently he has given it to me on the promise of the first ride on it and a barbecue when my missus returns from a trip - This is assuming she is still talking to me after she finds out I have yet another bike to add to the 10 in the workshop, under the stairs and in the parking space!