Well, think about it this way--how ever much you pay for a bike in that condition will be pretty insignificant compared to the cost of getting it going (depending, of course, on a number of factors). So you want to pay as little as possible. If the bidding goes over $300-400, which it might just do, I'd walk away. You don't know what is up with the motor at all, and will probably be replacing a lot of rusty and non-functioning parts. For starters, Tires, brakes, carb kits, a battery, chain and sprockets, and fork seals will be in the several hundred dollar range. And that's before you even know if the engine is solid or if it needs top/bottom end work.
If you wait and watch carefully every day, your can pick up an already running bike on Craigslist for under $1000 usually. Just my two cents!