Imagine going on a job interview looking shabby, or trying to sell your car for a good price when it's filthy and loaded with stuff. In a competitive market, you wouldn't do well.
The same can be said about selling your home. If it looks neglected and in need of work, some buyers won't even take a look. This is particularly the case in today's market where, in many parts of the country, there are far more homeowners anxious to sell than there are buyers interested in buying.