It's only a good deal if you value convenience above all else.
Trading in an SP3 with i7/8 GB/512GB nets you only $700??? Do people forget how expensive this SP3 configuration was??? This is an incredible machine for $700. There's no other $700 machine out there I would take over the SP3 with i7/8 GB/512GB.
Heck, my SP2 with i5/8 GB/512GB will only net $300!!! There is no $300 PC in the world that can match my SP2. Luckily, I didn't buy it at the original retail (got the machine for $800 brand new from Newegg with a Type Cover 2 included) but if I did pay the original $1500+129, there's no way I would get rid of it for only $300.
It's a good deal for Microsoft Stores because they can replenish their refurbished inventory in case people need replacements for broken machines. It's hard because Surface machines can't really be fixed. They must be replaced.
But if you must get rid of your old Surface machine, do it through Craigslist or Ebay. But why not have a second machine? You can use it as a backup or give it away as a gift to your kid or wife or whoever.