As agents when we walk into that listing appointment remember they asked you to come because we are a real estate professional and they are looking for guidance and solutions.

Now if your end game is merely to get your sign in the yard then you won't be in the game too long. However, if this is your career you get that it's a bigger picture. The bigger picture... your reputation, referrals, delivering on what you say! Remember you are dealing with folks biggest investment don't make it about you. Once you do you lose.
Maybe your excuse is you just can't be that hard on them, it will hurt their feelings. How would you feel if the cancer doctor felt really bad about your terminal diagnosis so he told you everything was fine come back in 6 months? That's what many agents are doing out there with seller's finances. They are over pricing homes to get the listing meanwhile the market is passing the seller by till they are in ruin.
I'm not talking about the seller who is not interested in what is going on in the market, or does not want direction on preparing the home to be competitive to get the highest dollar. We all have dealt with them. Sometimes this truth is hasrd to digest. You may have to be the second listing agent on those. Maintain your relationship with that customer.  They will repect your honesty and as a professional you have to make a business decision on the inventory that you represent, you cannot spend money on a house that won't sell.
If it smells, tell them, if it's cluttered tell them, if they want to overprice it for the market tell them. You should never be unkind however we need to be honest. Suggest an appraisal if need be, reccomend a stager if it will add value. It will never be in the sellers best interest to tell them what they want to hear if it's not the truth.
The Truth will not only set you free but take your career much further than a lie could ever take you! Your Customers will love you and ultimately net more on the sale of their homes.