Sometimes, buying an expired domain is preferred because it carries some attributes that cannot be earned up front when registering a web address for the first time. SEO experts look after these characteristics to see if a domain is good enough to buy for future re-selling or personal usage.
When a domain name you're after has been previously registered, you'll need to do a background check before buying it. Most expired domains are auctioned off, so knowing these things will help you determine which ones are worth your money. At the same time, you can also find out if a domain is hiding any skeletons in its closet.
Domain age
No matter what others may say, it is obvious that search engines consider domain age as one of their ranking factors. Simply put, domain age is one way of measuring authority and trustworthiness (spam sites generally don't last long).
Take this example, a query for the keyword "corporate giveaways". The top spot belongs to a website which has been around since 1999 - the oldest among the others on page 1. On the second spot is a website from circa 2006, while the third spot is a 10-year old website.
Looking at these results, it is obvious that domain age does have some control over search engine rankings. From what we can see, it looks like the second website was given priority because the keyword is in the domain name itself. Overall, the trend shows that older websites have a place in the first page of SERPs.
Previous penalties
A website involved in spam activity or other indecency is not tolerated by search engines. These websites are penalized. Suffice to say that a penalized website will not be able to perform SEO-wise for many months.
Right now, there is no standard way to check whether a website has been penalized. You'll have to rely on the transparency of the previous owner. In any case, if you think you bought a penalized website, you can simply send a reconsideration request or re-inclusion request to the search engine. Google provides an online form for this purpose (log-in required).
Established backlinks
A previously active website must have a portfolio of past promotions done by its webmaster. Established backlinks remain active even after a complete management turnover. Those wanting to buy an expired domain for SEO purposes look for a website with a good number of established backlinks to benefit from its leftover link juice.
Some type of backlink analysis should be done just to see what kind of promotion has been done in the past on a domain. Was it linking to quality websites, or is it involved in sketchy link exchange programs? You also want to look for relevant backlinks, so it can still benefit the new website.
Others
There is no telling how much people are willing to pay for an expired domain. It really depends on how much they are bent on having it. Sometimes you may have to weigh branding with cost because some domains sell for over $200.
Buying expired domains can be a lot of work than you initially thought, but the job can be easier if you know what you are looking for (and how much your budget is).
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