The most common problem with cheaper guitars is poor intonation and action. A more rare problem, but one to be wary of is incorrect fret placement. The action is easily judged with the eye and fingers. If you can see that the action is way too high, you should know that the notes will be sharp as you progress from the nut to the bridge because you're actually bending the strings in order to reach the frets. If you can see that the action is 1/2" too high but the 15th fret is perfectly in tune, walk away. :) Here are some tips on how to analyze the setup and quality of a guitar: Tune it to the nut, then press on each fret (on each string) and determine if the notes go sharp or flat. Could you adjust the action and truss rod a little bit (if the cheap guitar has one) to correct it? When I'm considering buying a guitar, whether it be cheap or expensive, I sit down at an amp that has a built in tuner and get it precisely in tune from the nut. Then, I'll bar the 12th fret and see how the tuner shows its accuracy. Check the 5th and 7th frets as well. If it passes the above fret test, the intonation test comes next, in the form of harmonic tuning. Natural Harmonic (NH) tones are the same at E5 & A7, A5 & D7, D5 & G7, G12 & (not NH) B8, and B5 & e7. I typically don't use the tuner for the latter test because you can tell by ear if they are the same. The tuner can help you confirm the notes aren't both sharp or flat, but that is rare because of the math involved in natural harmonics. This test takes string action out of the mix except for the G12. If the tones differ, or are consistently sharp or flat, BUT the fret tuning test passed, you'll probably want to put it down and walk away because this would mean that the frets are not measured correctly between the bridge and the nut. Let me clarify that last statement: If you put a tuner on a guitar and measure accurate notes at the nut, 5th, 7th, and 12th frets, but a NH tuning test finds the notes are off, then the measure between the bridge and the nut is not accurate. If the harmonics are perfect but and the frets are too, then it is likely a setup issue. Movement of the bridge saddle (used to adjust intonation) toward or away from the nut will cause the harmonics to quickly go sharp/flat (respectively) but the fretted notes will change more slowly. Using the above method, you may find that you've just picked up an $100 guitar that has amazing playing potential, or a $1000 used guitar that is never going to make you happy.