First you need to become very knowledgeable about what you want. Looking at New Bicycles will educate you about what type of bike you want and what is available. Test ride and learn as much as you can about new bikes to help you Buy-A Used-Bike cheaply.
If you get the opportunity to visit a couple of shops this will definitely add to your knowledge. Then when you test ride a used bike you will know if it rides like it should. This will also help you to judge value.
The Bicycle industry is broken into several Main Brands and then also several second Tier brands. The Top Tier Brands in my opinion:
Trek, Gary Fisher, Giant, Specialized, Cannondale, Raleigh, Diamond Back. These Brands tend to hold their value a little better in the used bike Market. From testing bikes at your local bicycle shop you will find what they sell. The bikes sold by the local dealers will probably have a little more local value.
Was it a $600 bike or was it a $1500 bike when it was new. How old is the bike? A ten year old $1200 used bike in like new condition is still probably worth only $200-$400. The person selling the used bike will often inflate what they paid for it. Ask to look at the purchase receipt if they still have it. The receipt will also tell you the age.
The first thing I check on a used bike is the overall look. Does the bike look like it has been stored outside? Is it rusty? What condition is the chain in? What condition are the tires in? Are there bald or near bald spots and or cracks from aging? Has the bike been ridden hard? Yes to any of these questions and I'm moving on.
There are a lot of bikes that are purchased and ridden for a summer or two and then left in the basement or garage. What we are looking for is a really nice condition bike---Search and you will find.
See if the wheels are round and true. Pick up the back of the bike and slowly spin the wheel forward. Pay attention to how it spins--does it rub the brakes? Does the rim have any flat spots in it? How easy does it roll? Now do this with the front wheel. While we are playing with the wheels check to see that the brakes are working well. How warn are the brake shoes?
Now lets check out the drive train. I would slowly spin the cranks backwards and look for bends or a wobble in the cranks and chain rings. Is the crank bearing loose?
Now lets take a test ride. Check the tire pressure before you ride it.
Do the shifters work properly. Does the chain rub in high gear? Does the shifter shift down to low gear? Does the bike ride as well as the new one you test rode? Under heavy acceleration do the cranks creak? Is there a click in the drive train?
From testing new bikes you should know what bike size range fits you for the type of riding you are looking to do.
You have to determine the approximate original Retail price of the bike.
I would start by dividing that by 2. That is the maximum I would pay for a used bike in Brand New Condition.
If it is beat up or rusty I would move on. There are a lot of nearly new used bikes for sale cheap. Many people will try to sell a used bike for way more than it is worth.
If you pay much more than 1/2 of new price you are probably better off buying from a Bike shop because they usually have a good warrantee and free tune-ups that go along with the new bike.
You need to be very careful you are not buying a stolen bike. If the seller has his original papers--awesome. Ask to see his sales receipt. I will not buy any used bike I am not certain is not stolen. If the deal seems to be a really good deal I get nervous that the bike is Stolen.
Ebay is a whole new can of honey/worms. Yes there are many good deals on Ebay. It is the best venue for selling and or buying for the educated buyer. BE CAREFUL!! There are many items described as like new that have been ridden hard.
A friend of mine spent a lot of money on a bike that needed several hundred dollars worth of work to get rideable. It was a Yeti and he checked the new price on the bike and the new price for all the components. It added up to over $2500. He got the bike and all the parts were what they said they were but the bike had been ridden really hard. He paid $1100 for it and it never worked right.
Also the shipping cost on a bike can be high because they ship as oversize 2 by UPS. Many bikes get damaged during shipping. You must be getting a SUPER deal to buy through Ebay and still risk not having seen and checked the condition. Be sure to get the price to ship the bike before you bid on it.
Good Feedback is the key to Ebay. If the seller has at least 20 positives and great overall rating you can probably trust them. I have sold thousands of items on Ebay and sometimes I have done real well and sometimes my buyer has done real well. The higher the price of the item I am buying the higher the number of positive feedbacks I want. If the item is over $600 I want at least 50 positives. I have written several articles on eBay. Ebay Tips, Ebay Shipping Tips, The Secret to EBay's Success.
How to Buy a Used Bike Summary
Start by figuring out what kind of bike you want. Check out new Bikes to be able to better gauge value and figure what size you should ride. Rust, bent wheels, clicking drivetrains, loose bearings, tire rot, any kind of abuse, move on.