Many sellers understand that prospective buyers are more attracted to homes that are spotlessly clean, updated and tastefully decorated. Often, however, sellers are unable to fully update their homes for showing. Homes that aren't newly "done" can be exceptional values, with an inherent "sweat equity potential" factor built in. You're not paying for expensive new interior decorating (much of which leaves with the sellers, anyway).
When a Realtor shows you houses that need work, imagine what they would look like empty, with worn carpets removed, floors refinished, fresh paint and your own furniture in the room. If the home is structurally sound and has updated systems, a small investment of elbow grease and paint could make it look fabulous.