I've been looking at picking up another bike lately, and I'd like to add something to what others have written. Because it really is hard.
--Get an overall feel for your seller. In the movies con artists are slick and cool, but most of the time lies can be picked apart with minimal effort. Is he (I'll just use the masculine from here on out to keep things simple) the type who seems like he took care of the bike? If you're buying off Craigslist, just look at the picture: I have literally seen a picture of a bike sitting over a puddle of oil (caption? "Runs Great!). Did the seller even bother to take a good photo? If it's blurred and dated 12/6/1998 with a digital imprint, and there's only one picture is this the sort of fellow who would be upfront about lapses in maintenance, damage, or needed repairs? Is the bike even in the same shape it was when the picture was taken? Talk to him on the phone. Can he even answer your questions: when was the oil changed, how many miles are on the chain, did you have it serviced or do you do it yourself. If he stutters and makes excuses go ahead and save yourself a trip and let someone else buy the piece of junk. If he says, "these things go forever, you just put gas in and go," or "changing the oil is over rated" run for your life. If he says he changes it, ask a follow up question: "what type of oil do you use?" Liars can be quick, but asking specific follow up questions can be revealing. I am always really impressed when a seller is totally upfront about problems, but when people say "Getting this thing to run would be a really fun winter project," I'm tempted to say, "Great, I'll let you have that fun and call you in April." But I usually just say, "I'm going to have to pass."
--Does the bike have a title? I've talked to people who want to convince me how easy it is to get a lost title on a bike. Again, great--you do it. Don't buy junk and don't buy something that will earn you jail time (or, more likely, will be confiscated when you try to title it). Do you think you'll get your cash back from this joker if the bike turns out to be stolen? Also, having passed from "friend" to "buddy" to "friend" with no paper trail is a good sign the thing wasn't cared for. The type of person who loses a title is not likely to be fastidious about maintenance and storage.
--Be skeptical of "Low Miles." It may be too good to be true: a 23 year old bike with 900 miles. Fantastic, but it's still 23 years old, and if it wasn't stored in a climate controlled bank vault, corrosion will have set in to some degree. 23 year old metal is 23 year old metal (likewise for rubber and plastic). We live on Earth. Things oxidize. That's not to say these bikes are worthless, but if you pull up and the bike is sitting in a junk filled yard, do yourself a favor and make a u-turn. If it's kept in a clean garage under a cover, next to the guy's meticulously restored '57 Bel Aire, it might be worth buying.
--Feel the engine right away when you see the bike. An old trick is to warm the bike up before a buyer shows up. When you call, specifically ask to see it cold. Tell him why and let him know you want to see how hard it is to start. If he gives you a line like there's another buyer coming right before you're about to show up, be skeptical. If he has a can of starter fluid in hand when it's time to turn it over (or if he has to employ some other oddball trick to get it going), you know to go elsewhere.
--All things being equal, buying from the original owner is best (this is rare, I know). If someone has had it for a very short time, it might be a lemon. Ask to see the title (you can tell how long he's had it). If he lies once and you catch him, put your wallet away.
--Don't meet up at a supermarket or anything like that. You want to see the exact spot this thing has been sitting on during storage. Meeting at strange places is an old scam.
--Remember, buying something is a business transaction. Don't buy it because the dude's wife is pregnant (or crying), because he "lost his job" or because he "really needs the money." If you aren't strong in that sort of situation, bring a hard nosed friend (one that would be happy to knock your wallet out of your hand and scream "no" if you need him to). Keep emotions out of your decision. Buying a bike shouldn't be an act of charity. If you want to give, write a check to the Red Cross. That's at least tax deductible. Paying too much to a meth head is not tax deductible.
--Avoid buying from your sketchy "friends." This is a bad one, because some people want to make it feel like they're doing you a favor when you're paying too much. Don't bother.
--NEVER promise to buy it before you see it and hear it (or before riding it, if possible). NEVER NEVER NEVER! This is how dirtballs get rid of their crap. If there is any misrepresentation, walk away. You don't owe this guy anything, no matter how desperate and manipulative he seems, and no matter what sob story you get after you back away from a bad deal.
--Unless there is documentation to prove otherwise, assume the bike was beat to hell and back. Don't accept the old tired gimmick of faked service dates (I've seen this: a Word document "documenting" service with no receipts. The numbers were conspicuously nice and round (i.e. 12/1/2010: Oil changed at 1500 miles. 3/15/2011: Oil changed at 3000 miles, etc.). Pull things apart. Is the air filter full of mouse skeletons and PopTart crumbs? Pass! My friend actually bought a dirt bike that had nothing but a smear of oil in it. It actually ran just fine (go Honda!) when he first got it home, but still. It sounded rough after a few minutes, and I checked the oil for him, and when I looked up from the bone dry dipstick we both exchanged a look that two people might when watching a pile of cash catch fire. I hit the kill switch and reminded myself to always check things like that before buying.
--Beware of the--ahem--"Homemade modifications". If the exhaust is held on with a coat hanger, and the seat is tied on with twine, wonder what other secret "improvements" are hiding where you can't see them.
--Try to avoid the giddy elation of an adventure, unless you are a trained mechanic and you do this for a living. Don't buy something that "probably only needs a new set of points" (Again, great, fix it yourself and call me back when it's tip top if it's just that easy). I've done this. I've gotten excited and bought something I shouldn't have thinking I'd "fix it up." Oh, I've done that all right, but do you think the guy who subsequently bought these things from me could give a rip? No. Nobody cares if you put 20K in work into something. They only want to pay what it's worth. One thing that consistently saddens me are ads for restoration projects that obviously went over budget: "Over 12,000 in parts alone. Divorce forces sale at 8,000 OBO."
--If you don't know how to check a bike, ask a friend to come along to look at the frame and listen to the engine. Check the compression, look at the spark plug, etc. Bring your own tools and do a nice, thorough check. I once sold an old VW Beetle for my father, and this guy showed up and went over the car with a fine toothed comb. He showed me more about that car in ten minutes than I ever knew, and subsequently passed on it (it had corrosion in all sorts of places I really didn't know about. The next couple showed up, asked no questions, and gushed over the color (I did not volunteer the other stranger's findings, but would have if they'd asked). They bought it after making sure it a.) started and b.) could back out of the driveway.
There are probably a million other points I could make, and I will admit I've learned all these things through my own mistakes (and the mistakes of those around me). I've bought junk I shouldn't have, fixed it up and sold it and felt really lucky to have only lost a couple hundred bucks in parts and a couple hundred hours in labor and stress. It's tough to be strapped, and I like to remind myself that I'm too poor to be cheap, but admittedly I've had more than my share of lapses in judgement. If you have questions about a potential bike, go ahead and post a query, asking other members if they would buy it or if there's anything they would do before forking over their cash.