Thanks for your reply happypanda. Our mechanic did not seem to want to negotiate. Maybe next time he will though? It's worth a shot.
We compared our regular trusted mechanic-$3,500
vs
Unknown Mechanic closer to home $4,000
vs
An Engine place, far away, inconvenient, that only replaces engines all day long $1,400
We went with the $1,400 option. Cars only been home 2 days but so far we seem to have made the right decision.
Hopefully this 16 year old Honda just got some new life because the rest of the car is in great working order and is still safe. We chose this route due to coworkers using the company.
We are moving ahead on our plan b which was to pay cash for 2 Fits in the future. Now we have to learn how to get dealerships to sell us cars at low prices when they have no incentive to do so. Each dealership has few Fitts, don't want to negotiate, and have no reason to think cash is king. They actually get a kick back for customers who do loans.
We are trying to live by that car buying video that Dave Ramsey shares. Have you seen it? It's the best video!