Hi,
There's an old saying that vintage S&W revolvers are never overpriced . . . but some are offered several years BEFORE they'll attain the asked for price!
The M36 you saw is that way . . . you can buy TWO of 'em for $600 if they have some honest wear. Don't worry about trying to talk that dealer down, he's so far out of line that it is an insult to INFORMED buyers. That dealer is simply holding out for a sucker.
I bought THIS Model 36 locally a five years ago for $350 . . . and this was a "decent" price for a really NICE "flat latch/diamond stock/pinned barrel Model 36 from the early '60s. Today? It would probably go for about $425-$450 . . . and this is a very desirable model.
After 1982 S&W stopped pinning the barrel (that's the little round thing sticking slightly out of the frame just past where the barrel enters the frame.
In 1967-68, they stopped using the wood stocks with the "diamond" on it . . . dropping the diamond but keeping the rest of the look. ALSO S&W fitted their wood stocks to a specific specimen back then and wrote the revolver's serial number on the inside of the right stock! Mine has the original stocks on it . . . raising the value.
In 1966, S&W stopped using the "flat latch" cylinder release. Mine was made in '64.
The finish is really nice . . . in original bright nickel-plate.
THE BAD NEWS . . .
S&W made more little Model 36 "J-frames" than any other gun by a huge margin. They are a dime a dozen and the vintage ones show up all the time in pawn shops and gun stores . . . usually after some grieving widow sells her husband's old "nightstand gun" he once bought and only fired a few times. Heck, mine only cost about $90 new back in the day, so the widow is happy to get $100-$150 bucks from the gun dealer.
These common revolvers are thus never going to command a high price.
MORE GOOD NEWS . . .
The Model 36, and its aluminum framed brother the Model 37 (along with all the J frames) are so concealable and light that they make the ultimate concealed carry revolver! With good technique skills they can be very accurate too, those the short sight radius on any handgun require the shooter to pay attention to perfectly align the sights.
Here's my nice, vintage Model 36 . . . a gun as good today as a new one . . and better finished too!!!
You can see the "flat latch" here. When I see a flat latch with diamond stocks I get a little light-headed and eager to pull out my wallet!
Accurate too . . . five shots at a tiny 1" black square @ ten yards, standing/unsupported! Great little protector!
Hope this helps!