How to know whether a site is penalized by google?

There is no clear-cut way to find out, just as there is usually no way to be 100% sure that Google has actually penalised any site (unless, possibly, you already control it, and have it hooked up to Webmaster Tools).

Two key things to do are:

1) look up as many of its backlinks as you can using, say SEO Spyglass, and see if there are dubious links that would have almost certainly harmed the site in the past - these include obvious spam blog comments, links embedded in crappy spun content, links from bad neighbourhoods of course (porn, warez, pharma etc.), links from sites in other languages (e.g. a lot of Russian or Chinese links are always suspicious), profile links, too many directory links, too many links from unrelated sites... you know the sort of links, anyway - it's got to all be totally CLEAN, obviously natural links.

2) look up the site in the Web Archive and inspect ALL snapshots of the site that you can find there - see if the previous content looked natural and legit, and also whether the site content drastically changed at any point (often a sign it got used in a blog network or something) - some people won't touch domains that were parked for any length of time, though that would not be subject to a penalty per se. Of course, avoid like the plague if there is any spammy or porn/casino/pharma-bla bla content in there.

Basically its common sense. ANYTHING that smacks of an Internet marketer having been "at work", I would avoid. You can't know everything about the domain (e.g. if it maybe got hacked at any point) but you can mostly avoid the real crap.

I am sure someone else can chime in here.

You already bought the domains, rank a page per domain, then you'll know...

A penalized site usually has dropped organic traffic and rank decrease in the SERPs.

In buying domains, I always make sure to do the following:

1. Check whois to make sure if it has been previously registered.
2. Check in Google search, simply key in info:domain. If the result in Google does not match with the description of the domain that you’re planning to buy, then it’s fake PR.
3. You can also check the backlinks of the domain using Majestic SEO.
4. Check the backlinks of the domain. You should target at getting at least 2 or more backlinks with PR that is equal or higher than the domain you want to buy. This gives you guarantee that the domain will maintain its PR in case one of the links was removed as the other link would be sufficient.
5. Check if it has inner pages with page rank. You can use SEOQuake or Google search (type in site: domain name).
6. Check if it has drops. If it has drops, then it’s not a good buy.

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