I've used a little rule of thumb when checking out engines with no documentation....lot's of times they AREN'T RUNNING for one reason or another..usually "it ran when I pulled it"...pop off the valve cover and check out the valve train. If it's clean, no creamy colored sludge, no rust stains, tap on rockers to verify free valves. Also pull the plugs to verify a relatively clean burn and use a screwdrive to move the flywheel...it's not seized! At this point you're pretty safe to classify this as rebuild material. I'd go a couple hundred at this point if all the components are on the engine. You may get lucky and have a runner.
If the seller is adament (and wants more money) that it is a recently rebuilt, I would expect to be able to pull the pan and pop a cap or two. I carry a torque wrench with me to retorque the bolts. If there is no sludge or metal fragments in the pan and the pan is dry on the outside (not been cleaned) but clean (front and rear seals weren't leaking at the time it last ran) I'd go a little more....If the owner balks at opening it up I give him my number and walk.
I recently paid a guy $400.00 for an "it ran when I parked it" 1960-235. But, it had an Offy manifold w/Rochesters (rebuildable-no slop throttle rods) with no major leak stains, a set of original Fenton Headers, 12v generator and starter, pressure plate/clutch disc/flywheel all in place. If the block could be rebuilt it would be a bonus. The manifold, carbs and exhaust manifold were worth the asking price. The block was good so I chalk this up to a good deal for me!!!
My rule of thumb eliminates a "pulled" engine that is seized. If I can't get at least a little movement I pass it up. However, if it's in a vehicle you're after I would seek a discount. Once again, you may get lucky!
If the engine is running, you're pretty safe with a no blue smoke, smooth idle, knock-free engine, that is no covered with gunk, with no rear main seal leaking. I takes some experience to learn the sounds of a sick engine but isn't that part of the fun of working with the "old stuff?" Hope this helps.
