I came from an M3 too. No regrets. The 4.6 and 4.8 are about as sporty of an SUV as money can buy.

I think the $16k is fair if you don't include the title scare. If the car was previously salvaged then I would either move on or offer $13k. As you know, keep $5k for rainy day repairs.

As far as searching for 4.8's... eBay, craigslist, and forums will have most of them.
A site I like for searching craigslist: SearchTempest Online Classifieds Search - All the Classifieds. One Search.
This is another site I use: Classified ads - Yakaz

As far as 3.0 v 4.4 v 4.6 v 4.8. That is question only you can answer. If you like having the best, go with the 4.6 or 4.8.

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2002 X5 4.6is - Titanium Silver / Black Alcantara - Dinan Stage 2 - Bilstein/Eibach - Brembo BBK ----SOLD---
1993 318i - Brilliantrot / Tan - bone stock daily driver