CarFax is about as good as word of mouth.
When I bought my second car, which I bought off eBay, I wanted the car - regardless of it's history, but the seller was like, "zomg LEWK AT TEH CARFAUX RPORT!11!", of course it was clean.
A year later I was in a fender bender, the front right fender of my vehicle was banged up, chipping some of the paint off to reveal a red coat of paint underneath. Clearly this vehicle's had parts replaced.