What level would you give the players a dancing sword?

I am currently DMing a campaign for level 5 players and one of them wants a dancing sword. I know the weapon is labelled as "very rare" but it doesn’t seem all that more powerful than a cleric with spiritual weapon. My question is when would you give the players an item like that and would you add any +1/+2/+3 modifiers? Note: I know about the recommendations regarding awarding magic items in the books. I just want to know if anyone can justify why it has the "very rare" rating and when you might give it out instead?