According to Blue book, the trade in value at the dealer is $11,130 and the price you can expect to get from a non-dealer (individual person selling it is $13,225.
So, you are paying an appropriate price that you may want to negotiate more. BUT, 1995 was the first year the E36 M3 was made so, naturally there will be more problems with it than a 1998 or 1999 that have had the kinks and known problems worked out. It could be a headache with stupid things breaking, the first year of any production model could be a problem, but if I were you and had $13k to drop I would definitelly get the M, they are worth it. Look around for a good mechanic before getting it. Call around to different shops and ask what tune up would be, how much a brake job is, etc. Compare prices. You DO NOT want to be taking it to a dealer, they will rip you off. I have BMW certified mechanic who charges me half what the dealer did. Plus a shop that really loves BMWs will do a much better job than a dealer who could give a crap about you. The dealer will tell you that the warranty will be void, anyone else will screw it up but that is all bull. I have a yellow 1998 myself and it is the sweetest ride ever. Get as dark a tint as you can too, it looks great with the yellow.