Cant go wrong with a P226 purchase.. they retain their value well.. and if taken care of will still be working properly years after you cease to do so..
that said, they are also common and readily available.. if I didnt think I was getting a very good deal on it.. I would probably pass... its not like you couldnt find another one next week if you decided you just couldnt live without a P226 in the safe..
I'd probably give him $50 more than the gun store is willing to give him and call it a day.. youre both getting a deal that way.. he is walking away with more money than he would get otherwise.. and you are getting a pistol at a price that is below normal retail for its age/condition..
On a side note, have you shot the P226 in .40 before? I have owned a number of Sigs over the years (P220, P228, P229, and P230), and carried one professionally for a couple of years as well (had an issued P229 in .357 sig and another one in 9mm at different times).. Personally I dont care much for the P226.. although I recognize that it is a very dependable and well designed pistol.. if I werent getting what I felt was a really good deal on it.. I wouldnt be too terribly interested (too many other things I prefer in both 9mm and in .40 that I could spend the money on)..