It's not uncommon when one hears an unrealistic or unreasonable price or position from their opponent.  Our first reaction might to feel insulted or question the sanity of our opponent.  Neither of these reactions will prove beneficial if you want to put a deal together with this party.

Rather than being argumentative about your negotiating opponent's price or position or, even worse, being confrontational about how 'unrealistic' their price/position is simply ask them to explain their price or position.

It's the old, yet effective, tactic of claiming that we don't understand.  It can come across as saying, "Your price or position is probably reasonable, but I am just struggling to understand it." (my fault, not yours.)

The beauty of this technique is that our opponent is encouraged by our inquiry. 

• They may even think we are trending toward agreeing with their price/position.  For that reason, they're willing, even anxious, to talk. 
• Be attentive.  What you'll learn can provide the leverage to have them adjust their price/position to more reasonable term.
• They'll likely share about their motivations. 
• They'll share about how they arrived at their price and position. 
• They'll tell about advice they've received from others in formulating their position. 
• Prompt them as they share to expand their comments, tell more and explain further.

What you'll hear will tell you if there is any unsound rationale or misplaced logic that you could tactfully counter later.  You can even look for points to connect or identify with them.  Be poised to share your limitations and budget.  Ask for their help in trying to devise an agreement that could work for both.

• Bottom line:  You'll be amazed at what you can learn when you ask for a full explanation (justification) for their position. 
• What's the old saying?  "It never hurts to ask."  It certainly applies in negotiating.