Overpriced. You could find the same model for cheaper on closeout at a local shop... without the worries of buying second hand and with the added benefit of a free tune up and the chance to build a relationship with the shop.

Even if the bike was bought, sat in the corner of a room for a year (not a garage, garages have moisture and it won't take long for the rust to start) and barely ridden... I wouldn't give more than $400 at the most for it. If it was used and needs any new parts (chain, cables, tires, pads, etc.) then deduct the cost of replacement from the $400. Then there's the fact that it may not fit as well as a new bike from the shop would (shops will often replace a stem at no charge to get a better fit).

It's probably worth about $300, but it's hard to say without seeing it in person and having the seller justify the asking price.

Ultimately, the value of a bike is the highest price someone is willing to pay for it... it varies by area, demand, and competition.