This is good advice. I bought a guitar on Ebay, and the action was not good. i ended up selling it. So, definitely go to a music store or pawn shop, where there will be a lot to choose from. Pick it up, sit down and play with it, see how it feels.
I like Takamine guitars, high quality for reasonable price. There are a lot of high quality cheap guitars these days.
With a $500 range, there should be a good selection for you.
Have fun!