It sounds like he's lowballing you. If he's $2,000 or more under TMV trade-in value, then that's more like an auction price.
Unlike a car that's sold at auction, he's more familiar with your car and has less risk of buying a lemon. But he may also know he has to put a bunch of time and money in your car before he can sell it again. His labor may be "free" but parts aren't cheap, even at jobber rates.
It's more hassle, but if you have the time and energy, you can probably get a better deal selling it yourself. There's a Sell Your Car link on the main Edmunds.com page and lots of people sell cars locally using craigslist.com
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