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There is a similar question from the Vajrayāna stand-point in which I gave an answer that was partially off-topic since it wasn't from that tradition's texts. So I thought it could be useful for newcomers to know what the early texts say on this matter.

Note: Since one is explicitly encouraged to answer his own questions for the sake of sharing his knowledge, I've also answered the question below.

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(Disclaimer: Bear in mind that this answer is structured for the purpose of providing references. This structure is entirely my own way of putting the answer together. I'd emphasize taking the references on their -own terms- without giving too much importance to this structure.)

To find a skillful teacher, one could approach the matter prudently by investigating the teacher for the following points:

  • Doesn't accept money, especially for teaching.1
  • Doesn't show traces of greed, hatred or delusion in their behavior.2
  • Meditates frequently and for lengthy periods.3
  • Eats once a day before noon.4
  • Is content with very little.5
  • Is bent on solitude & seclusion.6

Note that these points are just good guidelines and should be taken as a supplement to one's own discernment. A skillful teacher doesn't need to fulfill all of the points, but if he does, great, stick with him.

For further references, the following discourses might be of great aid:

  • DN 12: Teachers that are worthy & unworthy of criticism.
  • MN 8: The whole discourse is worth reading but I linked to the specific section about instruction called "Quenching".
  • MN 47: This discourse addresses the issue head-on. (Recommended)
  • AN 4.73: Qualities of a person of integrity. (Recommended)
  • AN 4.192: Shows how one finds a person's virtue, purity, endurance & wisdom. (Recommended)
  • AN 5.100: Teachers being covered up by their pupils.
  • AN 5.159: Five qualities a teacher should set up. (Recommended)
  • Dhp 158-159: Two verses about teachers.

1. AN 5.159 has five qualities a teacher should set up. The fourth one is that he will not teach for the purpose of material reward.
2. MN 150 mentions that recluses without greed, hatred & delusion are those that should be respected, venerated & honored.
3. DN 29 mentions that buddhist recluses live addicted to the pleasure of meditation.
4. MN 65 is a good reference about the Buddha's thoughts concerning this issue.
5. AN 4.27 is a good reminder about contentment with the bare minimum but I wouldn't advocate it as a necessary guideline.
6. AN 8.53 has the qualities that make-up the Buddha's teaching and one of them is solitude\seclusion.

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