Watch car outside back at home (7)
I believe the answer is:
monitor
'watch' is the definition.
(I know that monitor is a type of observe)
'car outside back at home' is the wordplay.
'car' becomes 'motor' (motor can informally mean a car).
'outside' means one lot of letters goes inside another.
'back' shows that the letters should be reversed in order.
'at home' becomes 'in' ('I'm in' can mean 'I'm at home').
'in' back-to-front is 'ni'.
'motor' placed around 'ni' is 'MONITOR'.
(Other definitions for monitor that I've seen before include "Supervisor - lizard" , "Supervise" , "record" , "Sort of lizard" , "Keep under surveillance" .)