I'm not going to lie; the bag looks bad but it's not a lost cause if you're willing to put forth the effort to clean it up. The first thing that stands out is the condition of the leather - it's heavily patinaed, most likely has a good amount of soiling, and is definitely dried out to the point where it's splitting. My personal suggestion would be to do an initial light cleaning with scent- and alcohol-free baby wipes to lift off the bulk of the dirt (avoid cleaning erasers as they'll only dry out the leather even more and your bag can't handle that at this point) and repeat this, allowing the leather to dry a little in between, until the wipes stop showing traces of dirt/staining. Now I'm not sure what country you live in but there are a few leather cleaners that are designed for sensitive vachetta, such as Apple Leather Care and Barbara's Lovin' My Bags (both can be purchased online and are worth considering!), and should be used next for a more through clean (read the instructions on the packaging as each product will be different). Allow the leather to partially dry in between cleanings so you can mark the progress; at this point the colour should lighten up noticeably, although not to the extent of a newer or more gently loved bag, and even out most of the staining. Afterwards you'll want to give everything a good conditioning to help lock in the moisture, keep the leather supple, and prevent it from drying out and cracking/splitting further. Again make sure to follow the instructions.
The next thing is the vernis itself; overall it's not too bad in consideration of it being a lighter colour in terms of transferring/staining. Give the surface a good cleaning with those baby wipes to remove the dirt and allow to dry throughly. Next, and this is where creativity comes into play, you're going to want to go to your local drugstore and see if you can find a nail polish in a very similar colour as the vernis (take the bag with you if you need to) and you're going to use that to only cover the areas where colour has chipped off completely. A judicious amount (a fine tipped paint brush would be best for this step) and a little patience will help to blend those bald spots in - there's a red stain on the side that can be covered since it's small but the larger one on the bottom is larger and is probably best if left alone. Allow to dry and touch up in areas that need a little extra work.
Lastly is the hardware. It's a coated metal, not actual brass, so avoid using a harsher brass/metal cleaner - instead try using either orange or lemon juice as the mild acidity will clean without lifting the coating off. Pour a very small amount of juice into a glass and dip a Q-tip into it; rub the hardware gently for a couple of seconds before wiping off with a lightly damp cloth and drying with a soft cloth. You can even do this for the teeth of the zipper since the juice won't harm the fabric, vernis, or leather.
For a final touch, once everything is done, you can always tie on a colourful scarf around one of the straps or add a charm; these will not only add colour and vibrance to your purse but will naturally draw attention away from it's 'scars'. Unless you pointed them out it's reasonable to assume that most people wouldn't notice.
Is it reasonable to expect the bag to look like new afterwards? Unfortunately no, but you can expect a significantly noticeable improvement and the bag's status to move from 'junk' to well-loved and completely useable...even in places you normally wouldn't want to take it in its current condition.
Would you be able to sell it afterwards? Yes and no. Many consignment stores and resellers will likely still turn it down since it has been very well-loved and would be more difficult to sell to make a worthwhile profit but if you where to sell it privately at a very good price then you may find yourself successful. Just remember to declare
everything and provide the potential buyer with detailed pics (even the paint job) so that they can't turn around and say that the item wasn't as described.
Hope this helps
I've restored a couple of bags in the past and have always found the results worth the effort and time. Here's some links that may be useful:
https://www.amazon.com/Apple-Brand-Leather-Cleaner-Conditioner/dp/B002626OLY
http://www.lovinmybags.com
http://forum.purseblog.com/threads/the-lv-rescue-club.195246/
