How do you handle all these REO requests?

[Federico Gutierrez]

Little bit on content behind this question.

I'm heavily advertising on Zillow in the cheaper priced areas (I'm really looking at my advertising stragery this quarter) and I get a heavy amount of leads from buyers always inquiring about the latest REO/Foreclosure/HUD that has his the market.

When I follow up with them and start asking the pre-qualifiction questions; are they pre-approved, are they a cash buyer, if so how much is their budget? have they ever fixed up a property. 
They start to filter themselves out quickly but some still push, "I want to see this house, I have the cash to buy it"
Yet they don't take into consideration the repair costs they would need to put into the property.

To my realtors out there, I ask you how do you go about telling a buyer you feel should not look be pursuing this path? Due to lack of financing or knowledge of what they are getting themselves into? Or the property is a dump and I don't want my reputation harmed?