To OP,
I always advocate for qualifying the customer further in your processes.
Never assume the customer is making a decision on economics and pragmatisim. Imagine how a pig FEELS wearing lipstick. AMAZING AND BEAUTIFUL. :thumbup:
What I have done in situations like this is tell the truth about concerns with the right follow up to maintain a polite exchange while still honoring your sincere concerns and qualifying the customer more deeply. In my view it is part of qualifying the customer and aiming for a high level of customer satisfaction in all of your processes including sales, recommendations and the legitimate advisory role you should take.
For example, "I am concerned that investing your money in this comparatively high end work for the neighborhood, that you would not be able to recover your investment IF you decided to sell. If you want to invest in this project for other reasons it would be helpful if I understood them. How important are the economics to your decision to invest in this project and what are the other reasons you want to do the project. :thumbsup:
I suspect the answer will be "I don't care about economics cause they aint sexy. It is something I have always wanted. This was my grandmothers house. I kissed my first boyfriend in the hallway closet. I carved my name in the tree about back when I was 7. I want the mo fo even of its the dumbest investment in the history of mankind. Do you want the job or not." :laughing:
At that point you can decide if you want to pursue the project. If not I would suggest many of the same suggestions already made with the best being "I am focused on other types of projects at the moment so I am not the right contractor for your project. I wish you well."
To be thorough, there is another camp that does not care to get into the customers reasons or economic well being. If they have the money and they want it for their own reasons, they do it without asking questions and they still sleep well. I don't think either way is wrong. It is a matter of what each values and their approach to taking or not taking responsibility for covering the wisdom of decisions a customer makes in an advisory capacity. Each camp might think the other is making mistakes.
Contractors that run with it without taking responsibility for advising against what might be an economically foolish are respecting the customers wishes without questioning the reason behind it other than they want it. Customer with money they want to spend for ants are adults with wants whether they are economically unsound or not. It is their prerogative to do so.
Contractors that question the wisdom of a decision for economics are concerned that customers are making a mistake they will regret and believe they are responsible to educate the customer for a harmful decision perhaps while ignoring that adults with money ought to be able to spend it on what they want without a judgment hassle from others or for purely economic reasons. Many customers make purchases for wholly uneconomic reasons. Happiness, ego, delusion, bragging rights, to prove a point, for the hell of it, boredom, tax deduction, etc.
There is no consensus on those two perspectives. I dont think either is wrong. They just have different beliefs and priorities.
Honoring your own comfort zone results in you working for the types of customers that agree with you and other contractors working with their type. That is a good outcome for everybody.
The amount of time and money invested and the type of project in these concerns also needs to be proportional or the whole conversation can be a silly waste of time.