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The rust doesn't look bad from what I can see. It's hard to tell because it looks like it's all been spray painted. From the visible rust, it looks like just surface, cosmetic kind of stuff.
If you're looking for something stock, or a daily driver, I would say pass.
If you're looking for a wheeling rig, I'd say go for it. Looks like all the works been done and it has at least a locker in the front? You might want to bump your budget up to around $4k and negotiate down. Should open a few more doors for you.
Doesn't look like you want to drive it on the road w/o a front sway bar. Used to have the same steering setup and I can confirm what you will find searching that it will have a pretty significant dead spot due to tie rod flop. Leads to loose and wandering steering If its just a trail beater that's another story, but I wouldn't spend 3K on a trail beater.
Not to be too forward, but I noticed you are in PA. Im trying to sell my XJ in northeast PA and if you plan on driving on roads it might be a better option. Please see my ad on craigslist as I haven't made a FS ad on here yet.
Its not meant to be pretty but to work well, I have done all the rigorous maintenance that any used XJ will require. I commute with it 50mi a day all year round has been completely reliable. That being said its setup is more more mild. 33"s lifted 4.5" Take a look and if you are interested or have any questions feel free to reach out.
Did still have the sway bars and new steering box and steering stabilizer. Looked great and I’m not so much worried about the rust and do plan to put more work into it. Also I was looking at the decently low mileage it had because I don’t want something with 150k plus mileage. Thanks