I'm a serious record collector originally from the U.K., now living and working in Japan. I have an extensive record collection that parts of I occasionally sell on in order to fund future vinyl purchases. I only sell items in a condition that I myself would be happy with buying.
All records I sell are visually inspected AND play tested to ensure accurate grading. I use the "Record Collector's Grading System" for reference. The standard condition categories and a description of what each one means are listed below (I very rarely buy or sell vinyl that is graded below "excellent")...
EXCELLENT - The record shows some signs of having been played, but there is very little lessening in sound quality. The cover and packaging might have slight wear and/or creasing.
VERY GOOD - The record has obviously been played many times, but displays no major deterioration in sound quality, despite noticeable surface marks and the occasional light scratch. Normal wear and tear on the cover or extra items, without any major defects, is acceptable.
GOOD - The record has been played so much that the sound quality has noticeably deteriorated, perhaps with some distortion and mild scratches. The cover and contents suffer from folding, scuffing of edges, spine splits, discolouration, etc.
CDs - As a general rule CDs either play perfectly - in which case they are in Mint condition - or they don't, in which case their value is minimal. CDs are difficult to grade visually: they can look perfect but actually be faulty, while in other cases they may appear damaged but still play perfectly. Cassette and CD inlays and booklets should be graded in the same way as record covers and sleeves. In general, the plastic containers for cassettes and CDs can easily be replaced if they are broken or scratched, but card covers and digipaks are subject to the same wear as record sleeves.