Wow, those are like crazy prices. Be patient and expand your search radius.

$3000 was a common price for an XJ with 125k miles on it a few years ago.
They are not collector's items. Have priced actually gone up since 2012?

 

Where are you located? Try not to buy from a dealer.

Here are examples of what I remember the market to be:
http://denver.craigslist.org/cto/5990537567.html

This guy has clearly been trying to sell for a long time
http://fortcollins.craigslist.org/cto/5990541502.html

http://denver.craigslist.org/cto/5990103527.html
http://denver.craigslist.org/cto/5990108996.html

You might consider one that has the mods you plan to do.
http://westslope.craigslist.org/cto/5989925563.html

This looks clean. I wonder what the price and miles are
http://denver.craigslist.org/ctd/5989280830.html

 

Decent no rust ones go for more money than they did a few yrs. ago for sure even with 200,000 mi. on them and they are harder to find. Damned rust or a kids been working on one then it became to much for them to do, they are still cheaper.

 

The most common ones popping up out here have around 200k on them and if somewhat clean, its going to be in the $3500 range. No rust to worry about out here. Seems like even pretty beat 4wds are getting around $2-2500. I sold my last XJ in 2012 for $5000. Had 220k miles on body (was a 1998), bald tires, a RC short arm lift, death wobble, not in the best condition on the outside, new engine, trans, t-case and carpet. Seems about on par with prices today.

 

Check out this gem.

https://bakersfield.craigslist.org/cto/5990069336.html

 

This looks pretty good too. Are you from the denver area?

Both of these are worth 3000 IMO. Both need some work, but nothing major, and both look rust free from the pics;

https://denver.craigslist.org/cto/5983982520.html

https://denver.craigslist.org/cto/5992859132.html

This one is worth 2000 for sure. Needs front suspension but easy enough
https://denver.craigslist.org/cto/5973879712.html

If you aren't set on an XJ, this ZJ looks pretty nice for the price;
https://denver.craigslist.org/cto/5980827026.html

 

Im gonna have to change my search parameters. I hadnt seen the white one and have only been looking for a '99. I guess Im not deadset on a '99.. Thx guys

 

97-01 are basically the same.

That white one is not worth $3500.
It's clearly been owned by an idiot

 

Im up here in michigan and unless that jeep has a 6inch BDS long arm lift with dana44 and aussie lockers and brand new 35s with winch bumper and aftermarket rear bumper theres no way id pay 3800 for that.

 

That last 00' looks decent. Ask for a test drive then take it to a local garage and just pay the easy 80 bucks to have them over look everything?

 

Meh, id stay away from 2000-2001. They switched over to the less desirable low pinion dana 30 and have known head issues.

97-99 are the best years in my opinion, but a lot of it depends on what your plans are for the jeep.