Whatever happened to "just say no?". One of my questions that I ask every buyer is what price are you trying to stay under? That gives me the parameters I need to set up their searches.
When the buyer "finds" a home that did not fall within those parameters, we discuss why it did not meet their needs, budgetary, size, style or whatever. Then we as a team can decide to adjust the search, see the home or move on.
The 97% rule is good, although it doesn't fit in every case. It really depends on how hard you are willing to work for an unreasonable client. If it is one house that is overpriced, stagnant on the market I might have a word with the listing agent to see what I could learn about the sellers motivation. That said, I sure wouldn't exceed my clients budget on a regular basis,.
What is your limit? How far above their price point are you willing to show them? Do they want to risk falling in love with a home only to find that the seller will not negotiate to meet their price?