A cavaquinho is four steel strings on a short scale and a small body. It is not a small guitar, and it is not a steel-strung ukulele: the tension is higher than a ukulele’s and concentrated on a top that has very little area to spread it across. Everything worth checking follows from that.
Cavaquinho, cavaco, and the regional cousins
In Brazil the instrument is called both cavaquinho and cavaco, and the two words are used for the same thing in ordinary speech. The Portuguese cavaquinho is a related but distinct instrument with its own regional tunings; this site models the Brazilian instrument in the tuning the registry carries, D–G–B–D. If a listing does not say which tradition it comes from, the tuning it ships in usually will.
The top is the instrument
A solid top will usually sound better as it is played in; a laminate top is more forgiving of humidity swings and travel. Neither is wrong, and at the low end a well-braced laminate beats a badly-braced solid top comfortably. What you are listening for is whether the instrument sounds like it has any depth at all under a full stroke, or whether it thins out the moment more than one string is moving.
What to check, in order
Sight the neck for a bow. Look at the top behind the bridge for a bulge — steel at this tension on a small box either sits flat or tells you it does not. Turn the four tuners; check them for slip rather than smoothness. Then play a chord from the chord library hard, at the tempo you would actually use, and listen for buzzing and for whether the notes stay separate or blur into one another.
Bring the pick you use
This instrument is played with a pick, and how a cavaquinho responds is inseparable from what strikes it. A thin pick on a bright instrument is a different machine from a stiff one on the same box, and shop instruments are usually demonstrated with whatever pick was to hand. Bring your own, play a figure from the batida pages, and judge it as the instrument you will actually own.