Do a little Craig's List or eBay shopping and you'll find much better deals. I live in the Midwest, we have lots of options around here. Here are a few CL listings to wet your appetite:
http://carbondale.craigslist.org/tls/5886082089.html
http://dubuque.craigslist.org/tls/5923215538.html
http://buffalo.craigslist.org/tls/5894452305.html
http://milwaukee.craigslist.org/tls/5875380044.html
http://milwaukee.craigslist.org/tls/5885747096.html
I don't envy your quandary of buying new vs. old. Old is generally cheaper and possibly tooled up, but might have wear issues. I don't own a South Bend and am treading lightly here (trying not to offend anyone), but I'm not a fan of what I believe are plain bearings in the head stock for the spindle. Also not a fan of the clutch knob on the apron for the power feeds. Of course, they sold many, many of the lathes so they were doing something right! There are most likely variations of South Bend lathes with over-center lever feed engagement and tapered roller bearing in the head stock if those are concerns for you.
I have a Rockwell 10 x 36 that came out of a local high school, needed a little work on the apron and taper attachment. I could do the work on the Rockwell, didn't need to make the necessary parts on my Atlas 12 x 36. It was completely tooled up (3-jaw, 4-jaw, 4-C collets, tool post grinder, centers, lantern style tool holders).
Also have a Clausing 12 x 24 that came out of the high school shop my dad taught at. No work needed on that lathe, and it was tooled up. The only thing I did was replace the 3-phase motor with a single phase. It came with a 3-jaw, 4-jaw, centers, and a complete set of lantern style tool holders. I've since added a 5-C collet chuck and set of collets. I have a total over under $1500 in those two lathes combined (bragging now, but picked up the Rockwell for a whopping $25 . . . ).
My main lathe now is a Grizzly G0709 14 x 40 model. Paid around $4500 during a 10% off sale. Since then I've added a DRO (~$400), taper attachment (~$400), 5-C collet closer and collets in 1/64" steps (~$550), at least 30 BXA tool holders (~$350), boring bars and other insert style tool holders (~$700). So my new lathe at $4500 is at close to $7000 all tooled up. There's not a lot I can't do on the old American iron at $1500 that can be done on my Chinese $7000 lathe.
Probably the best advice is to watch sales for a few months and get a good idea of what going prices are. Consider what's there tooling-wise as it can add up quickly. Jump in too quickly and you might have buyer's remorse. Also, the seller is selling the machinery for a reason. We have a local farmer that for about 5 years straight was selling yet another pick up with a Western plow on the front. I was tempted but wondered why he was flipping them year after year. He has two newer trucks with blades now, was probably dumping his old junk because he was tired of working on it. Good luck with the shopping and welcome to the forum!
Bruce
