The most obvious reason you shouldn’t send a lowball offer for a domain name is because it’s unlikely you’ll even receive the courtesy of a response. I guess courtesy may be the wrong word, since some domain owners might not think it’s courteous to offer $500 for a domain name that’s worth $25,000.
There’s another important reason you don’t really want to submit a lowball offer. If you do receive a response, but you don’t receive a counter offer, you will likely be inclined to improve your offer. Now that you know someone is at least monitoring the email address, you might think to come back at $4,000. That’s still a bargain if the name is worth $25,000.
The domain owner will certainly take note of your 8x price increase, and anyone with a brain and a business sense will automatically turn that down figuring there’s gotta be additional money in the bank to raise the offer.
When I reject an opening offer but don’t give my price, my eyes light up when the potential buyer significantly increases his offer. Even if the second offer is a number I’d accept, I’d never immediately accept it knowing that the next offer will be even higher. My feeling in doing so is that I can always go back and take the offer if the potential buyer says that’s his highest offer.
That being said, when you’re on the other side of the table, you need to realize a huge % increase in your offer will almost certainly work against you, so lowballing on a domain name you want to buy is a bad strategy.