What to do with very low offer on an item for sale

Negotiation 101.  If you get an offer, any offer, step 1 is to determine if it is a serious offer, or if it is just an opportunist on a fishing trip.  Step 2. determine whether to react or not.  The reaction can be to accept, to counter, or to reject.  In the case you describe, the offer is obviously not serious and I agree with @rpeluso that your best course of action is to ignore it.  Since you have already researched the value of your offering, you are safe to wait for a more reasonable offer.  

I would just say, no thank you. He might come back with a better offer.

I join you as a "retired audio guy." Under the premise that you priced what you are selling realistically, based on comps, you have ZERO obligation to respond to an individual offering 25% of your asking price. Your offering a "good faith" additional 10% off to an individual making a reasonable offer would/could make sense. Remember, there are plenty of "bottom feeders" out there who feel entitled to offer whatever they want.

It's polite to respond.  You do not have to make a counter offer.  You could say something like -- it's priced like other recent sales and I think someone else will meet my number.  See what he says.  You'll be in better position to know how serious he is.

I get ridiculously absurd offers all the time, recently, $60k burmester 218 amp with warranty, asking $24k plus shipping, offered $16k