I read this article from Realty Times today on good prospects vs. bad prospects. If you get a referral from a friend or former clients it's not always going to be a qualified lead, but is that so bad? It is if you're only thinking about the bottom line.
Another way to look at this so called "bad" prospect (I'd like to refer to them as "unqualified leads") is that they can be put on a plan. Help them get all their financial information in order. Send them to a reputable lender who can put them on a plan to save or a plan to pay off necessary debt, or a plan to increase their credit score over time. It's a little time and work up front but in one year you may have a ready, willing and able buyer.
Furthermore, this buyer may be a great source for additional referrals. Not every referral will be ready to buy now. I've had several great referrals who are not ready to buy now. The time I spent with them on looking at 1-3 houses and speaking with them about the value of having a lender review with them their financial position.
Quality service goes hand in hand with C-A-R-I-N-G.