The two estate agent groups confirmed ongoing talks in statements to the stock exchange this morning.
LSL’s financial services brands also include the network Primis and club The Mortgage Alliance (TMA).
A deal raises the prospect of significant job cuts if it were to go ahead.
However, both companies stressed: “At this stage, there can be no certainty that any offer will ultimately be made for Countrywide.”
And added that “a further announcement will be made when appropriate”.
Countrywide is one of Britain’s biggest estate agencies but has struggled in recent years with debts and a tough trading environment.
It described 2018 as a “year of reset”, after a loss after tax of £218.2m despite it being a record year for mortgage business.
Countrywide was also fined twice during 2019 for money handling issues.
HMRC fined it £215,000 for failing to adhere to money laundering regulations, while the Royal Institution of Chartered Surveyors fined it £100,000 for mishandling £10m of client money.
Countrywide also agreed the sale of its Lambert Smith Hampton brand for £38m in November.
However it this has yet to be completed as the prospective buyer John Bengt Moeller has been unable to provide the cash for the deal.
LSL last year closed 124 estate agent branches of its Your Move and Reed Rains brands.
The group also owns Marsh & Parsons and LSLi Estate Agency.