Feedback: Ebay's feedback system is fairly easy to manipulate. Unscrupulous sellers can wait until they get feedback from a buyer before they leave theirs--If a buyer leaves a negative, the seller can also leave a negative, then ask for mutual feedback removal.
99% is suitable feedback, anything below 98% should be investigated by checking the feedback comments, and looking for neutrals and mutually-removed feedback. Check for attitude, and check whoever gave the feedback. Toolhause.org has a great set of tools to find just the negative and neutral feedback. Update--As of 2008, Ebay has changed how feedback is calculated, and removed the ability of sellers to leave negative for buyers. It appears that this is resulting in overall lower feedback scores for buyers.
Negative signs--These aren't _all_ reasons to avoid a deal, but if there are too many of them be cautious.
Low number of transactions, but a non-standard, professional looking page layout.
"Easily repaired"--Although this may be technically true, almost all repairs will involve servicing--Disassemble, clean, reassemble, lube and adjust, plus any replacement parts. $40 is cheap for a proper servicing. "Easily repaired" from a professional watch seller--if it is easy, why not get the repair done and sell it for more?
"Overwound"--Apparently this is intended to mean that someone wound the watch too much and the repair is simple. There's no such thing as overwound--instead there is something that has kept the watch from unwinding. This could be simple dirt, requiring a basic servicing, or damaged parts that have to be hand-made at great expense.
"Just needs a battery (no returns)". Likely true if it is an inexpensive quartz, otherwise be careful. Especially true for Accutrons. "Works with test battery" or "will include new battery for $" is probably OK. 'quits when face up/face down'--Probably a broken balance pivot or jewel.
Blurry or tiny pictures: Potluck. Watches are difficult to accurately photograph. If it is an occasional seller, or someone who specializes in a different type of item, it may be OK. If they sell lots of watches, possibly hiding something. I've had some very good luck buying items with bad pictures from people who don't sell watches regularly.
Pay attention to shipping charges, and avoid sellers with excessive charges. If no shipping is listed, always ask costs before bidding.
Picture of the movement, especially for vintage mechanicals. Not so important for Timex or quartz.
Many clear pictures
Pointing out flaws
High feedback, both percentage and number of transactions.
Clear statement about running condition--"Runs and keeps time", "Keeps time to within XX per day" "Doesn't run, balance good" "Runs and stops" (Assuming you can deal with whatever problems they say)
It is fairly frequent that a batch of watches will sell for about the price of the best watch in the batch. I will typically add up the minimum I think the watches will re-sell for individually, and bid accordingly.