Originally Posted by poloponies
USED but still under warranty, decidedly more valuable than used and out of warranty. A refurb is "like new" in every respect. It wasn't necessarily broken in the first place, it could have been purchased new, opened and returned in the first couple of weeks in perfect condition. Even if it was broken, it's indistinguishable from new.
Either way, as AppleCruncher and poloponies both point out, a used iPad bought in a private sale will generally cost less than an Apple certified refurb.
Personally, I think that $500 is too much, I would offer $400 and see it s/he takes it.
There is generally a discount factor that should be considered when purchasing anything used in a private sale. If there is something wrong with the iPad, it is unlikely that you will have any recourse with the seller. This is the risk that you take in a private sale and the price you pay should reflect that risk. It has nothing to do with the age or condition of the product you are purchasing.
Again this doesn't just apply to Apple products, it should apply to anything you are considering purchasing used in a private sale.