Bought an expired domain and it turned out to have a Google penalty. Is it worthless?

I purchased an expired domain on Godaddy Auctions for about $1,500 which had quite a few backlinks. I thought it would give me a head start with SEO.

I, unfortunately, didn't research the domain out properly before buying it. The domain seems to have been used to spam people (it is on a few domain block lists) and likely also has a Google penalty.

Is there any recourse for such domains to clear their old status since they're under new ownership now? Or should I just admit my $1500 went down the drain and move on?

You could:

1. Use Disavow tool to tell Google not to count spammy backlinks.
2. Put a couple of pages of content up on that domain. On each page add a made up word that doesn't exist anywhere on the web. For example: "fhwduty825shw"
3. After a few days, search for that dummy word and see if it shows in Google. If it does, there might not be a Google penalty.

You have to ask yourself if your time to do all these (and likely more to get it removed from email spam blacklists) is worth the $1500 you are trying to salvage now.

If the answer is no, just use LeanDomainSearch to find another domain name. Or another expired one on auction (don't forget to do your due diligence this time around :)