Personally, I probably would have paid $16,500...
I am a sucker for these cars, so I would probably have spent a little more.
Prices are falling, but good examples are hard to find. There are not many 750iL true Sport packages out there (does it have the inlay wood trim?). And, there are not many low mileage excellent condition cars out there.
About 18 months ago, I bought a 2000 750iL Highline Edition with almost $90K miles for around $19K. To me, that was bargain. I had been looking for a Highline for more than a year, and I found one of the few. Mine was a one-owner car that was perfectly maintained.
If you are looking at a car in great condition that is the color combination you want, then it is worth the extra money. The seller's $16,500 asking price is not out of line, and $13,500 is a lowball. If you really love the car, I would continue negotiating and be happy with whatever you settle on. I would be surprised if you could get the seller below $16,000. I did an AutoTrader search, and there are only 4 cars 750iL cars in the country with fewer than 65K miles. The asking prices on all of those are above $20K. Asking is not getting, but the seller of this car has no reason to go much lower.
2000 E38 750iL Highline Edition with 18" Style 118 Wheels and Runflats
MKIV and 16:9 Navigation, TV, and Backup Camera
New Gen Radio, Sirius, Aux Input for my iPod, Bluetooth, and E39 M5 Tire Pressure Monitor System