I would be leery of the Volvo as well. 4000 hours isn't bad if well maintained but a disaster if not. By the way it is wrongly listed as a 2 stroke - it is a 2 cylinder 4 stroke. Volvo parts are very expensive but they are good engines. By the way a Bosch starter will work and they are a lot less than the Volvo starter.
An engine survey by a good marine mechanic (Volvo ideally) would be a good idea. As would a condition survey of your own.
I don't think the cabin heater is a throwaway - fine for occasional weekend use, but I admit it is not the best type of propane heater. The Dickinson's like this
DickinsonMarine.com - Propane Fireplaces are better as they use outside air for combustion and the firebox is sealed from the cabin. The one in the listing has an open flame.
Yes the water heater is mounted to the bulkhead above the head. If vented properly they aren't bad but insurance companies hate them.
The pictures are small but the boat does look well maintained. The bottom looks good as does the saildrive leg.
The normal things to check are the chainplates (for leaks) and soft decks.
The listing states "reduced" but at this time of year I would try a lower price.
It says the boat is in Victoria Harbour - wonder where, I get to most of the marinas but haven't seen it.