Yeah, I'd definitely look for something used. There are other message boards more based around pro audio where you can find private sellers if you're skiddish about ebay in particular. Here for example:
http://forums.prosoundweb.com/index.php/board,4.0.html
It's gonna be tough to get something that isn't total crap for $1200. I assume you're going to need a source unless you're going to use a laptop you already have or something like that, a mixer - even if it's just a small one with just a couple of channels, then you'll need at least one power amplifier, and a pair of speakers. If you want much in the way of bass, you'll also need a stereo 2-way crossover, at least two power amps, and 1-2 subwoofers. The fact is, you could spend your entire budget just on the two main speakers and not really have something all that fantastic. A lot of people in your position buy big cheap 2-way, dual 15" cabs from JBL, Yamaha, Peavey, Cerwin-Vega, EV, etc. and they all sound like garbage.
My advice would be three things:
1. Save your money until you an afford something you (and your clients) won't regret. $1200 will just get you stuff that needs replaced as soon as possible. Aim for closer to $3000.
2. Buy used if you can find it. This kind of gear isn't all that fragile and has a long life. You'll get a lot more for your money that way.
3. DON'T buy huge, cheap boxes because they
look like they'll give you a lot of bass. Get something compact but high quality and with sufficient output capabilities for your desired venue, then let separate subwoofers do the heavy lifting. You'll end up with better sound and fewer back problems.
For starters though, there's somebody selling a nice QSC PLX1602 for $300 on that forum I linked to above. There's also somebody listing a pair of EAW LA400 subwoofers, which are perfect for DJ applications. They only go down to 45hz but are capable of huge output and high quality, and they come with casters and a handle to make them their own dolly. I've heard them and they sound quite good. They'd stretch even my recommended budget, so maybe start with one and add on later.
As far as the rest of the system:
For speakers, I like the
Yamaha club series V for budget level stuff. If you have to buy new I'd probably go that route. If I were shopping used I'd try to find a great deal on a pair of JBL SRX715's or EAW LA215's.
Mixer - if you buy new, I'd do something like this:
http://www.musiciansfriend.com/pro-audio/soundcraft-notepad-102-mixer/430565000000000. I know, no eq on the stereo channels, but if you don't buy crap speakers that won't matter, and you can pump up the LF levels at the crossover if you really want to. If you buy used, you can get a great deal on an older Mackie 1202vlz or an old Spirit by Soundcraft compact mixer, or a variety of Behringers, although my preference would be the Spirit stuff.
Crossover - I once bought a Behringer Super-X and regretted it mightily until it broke and I replaced it with a Rane. It was awful, so don't buy one. Look for a used deal on a 2-way unit from Rane, DBX, or BBE. You may even get lucky and score an Ashley on the cheap. If buying new, DBX seems to have the best deals under $200, but ymmv.
Amps - I like QSC best, followed by Crown, but there are a bunch of brands fighting for the $300-$700 space and most of them are at least halfway decent at this point. The $300 PLX1602 above is a real score though.
Cables - Monoprice. I have some of their pro cables and they're pretty sturdy. There may be some store brands almost as cheap, but these will be nicer.
You'll notice that even if you went with the Yamaha speakers, ($740/pr) the cheapo mixer, ($50) The used amp, ($300) The budget XO, ($179) and the monoprice cables, ($50-ish depending on lengths) you'll exceed your budget before even touching subs.
