Today, many consumer electronics devices have video capturing capability which is one of the most time, power and memory consuming application. Motion estimation (ME) is the key part of the video coding process in terms of computational load. Thus, it is important to implement this process in a resource efficient way without degrading the encoding quality and real-time operation performance. Low bit-depth representation based ME methods draw a lot of attention in consumer electronics area mainly thanks to its highly efficient hardware and software implementations. However, these low bit-depth representation based methods generally assume that the low bit-depth images are already available. Furthermore, these methods simply neglect the binarization cost which is not a proper approach when whole encoding architecture is of concern.