looks like a really good deal. the body looks good, the seats look ok but could be swapped out for sr5 seats anyway. same thing with the dash cluster, swap in an sr5 so you have a tach. i'm sure there's lots of cleaning and little things to fix but i love that kind of stuff.
i assume that by valve job, he means replace the valves. i would do a compression test first though so you have a better idea of how well both the rings and valves are sealing. might even want to do that before you buy it just to be safe.
"probably will need a valve job" could mean anything. If the compression is good in all cylinders than the valves are good. It might need valve stem seals, which can be done from the top without removing the head. Usually a "valve job" is to remove the head, remove the valves, springs, keepers and stem seals; resurface the faces of the valves and seats (in our cars I would highly recommend replacing the exhaust valves rather than just refacing them, the intakes can be refaced no problem). If the valve guides are worn beyond specifications, they should be replaced too, and than it all assembled with new stem seals, new exhaust valves, and the head gets reinstalled on the engine. Many machine shops will also resurface the gasket mating face of the head. All of this is usually done by a machine shop, some of these operations you can do at home (see my head gasket replacement guide over in the repair guides section). They would also try and convince you to have a crack check done, but I have found that unless it was very badly overheated, the toyota heads are pretty good cracks are almost non-existent, so a crack check is usually a waste of money. If you pulled the head off and took it to a machine shop you would be looking at about $160-200 for parts and machine shop services.
but if it runs good after a tune-up, carb adjust/vac routing-leak check, than I would just put some additives into the oil to clean out the gunk, plus a seal conditioner and drive it as is. If it needs a head gasket than consider doing a complete valve job.
That is a great deal at $500, if the trans is good, the body looks decent, no matter the condition of the engine, this is a good deal. Someone should buy it!