Quote: "3 dealerships have all made almost identical offers, although only one took the time to explain and demonstrate the paint issue to me. Private sale is an option, but I couldn't sell that to someone without disclosing that issue and who is going to buy a car requiring a re-paint on 1/3 of it".

You should disclose it, but even so, there may be some folks out there that would not care to have it re-painted. Even if they had to repair it, I would not think it unreasonable to ask for $16k for a private sale. $16K + $1600 for a paint job, would put the price at $17,600 which is not outstanding , but reasonable.