I check figures and boxes for the following attributes, and grade each attribute out of a possible 10 (10 being MINT):
10 - MINT
9 - Minor flaws
8 - Light flaws
7 - Moderate flaws
6 - Heavy flaws but unbroken
1-5 - Varying degrees of broken or missing parts of actual figure (such as an arm or other appendage) or box.
I rarely grade anything 10, unless I am confident no one else will be able to find any flaws (I will usually get the help of my wife to verify this). All major flaws or broken/missing bits will always be explicitly and obviously pointed out in the auction description