The lower asking price will not benefit the seller.  The buyer will still offer less because of what needs fixing.  I would prefer they fix them and sell at the highest price they can.

Price first. When an allowance is offered it generally is not satisfactory to the buyer anyway. The price will get in more buyers to look.

I'd rather they just fix the problem up front. But in the absence of that, do a lower price. Buyers don't like allowances and lenders don't allow them in many cases. Besides, how do you decide the appropriate allowance. People have different ideas for standards and quality of fix-ups.

I like to write a good and clean offer right up front. 

Best to start with an accurate asking price, though many buyer and their agents take advantage of buyers who do by expecting to renegotiate the price when repairs are needed.

Lower asking price always (IMHO) with wording in the description that states the condition is reflected in the asking price. Never found  "allowances" attractive. If anything, it complicates the matter, a nice clean cut offer based on condition is mostly preferred even though the net numbers could be the same with an offer reflecting a allowance situation.

Fix the items

A price that obviously reflects the condition.   If it is priced well in our market, the savvy buyers and their agents will understand the value.  If the value is not obvious, you're likely to encounter no or low offers. 

the home should be priced to sell in its present condition... there should be written bids for large jobs....to determine the price, start with the top condition price and deduct all of the costs needed to satisfy the jobs to reach the present state.

I would rather my seller fix the problems. 

Blake - Good question, and obviously there is a difference of opinion on this. I would much rather have the repairs done, but that wasn't an option in your question.

So, I believe that an allowance would be a better way to go simply because you are stating that you know there are issues with the home, and you are already giving money to the buyer to fix them. If you go with a lower price, the buyer will probably not realize that the price is lower based on things that need repaired, so they will probably offer an even lower price.

Lower the asking price!

Highly debatable. Do the CMA if it does not sell allow $%K for carpet allowance.  As IS sale.

Lower price to compensate for needed work, or better yet, have seller fix as much as they can afford to fix. Get estimates from licensed contractors if need be. The problem with allowances is: The seller and agent will say" let's allow $800.00 to paint that bedroom", then the buyer and his agent will say, " It's gonna cost me $2500.00 to have that bedroom painted ". Buyers always seem to overestimate cost of repairs.

What you suggest is to start the process with the seller negotiation with themselves..before anyone makes an offer. Once the seller starts going backwards, momentum will not be their friend.

Price properly and sell 'As Is' (this leaves repair decisions in the sellers hands) with a benefit. Then play wisely the cards you have.  Know who the ideal buyer is and sell the house to that buyer. Kick the others to the curb.

Blake Rickels First off I believe the seller should make the repairs before putting the property on the market. If they can't an allowance works better than a lower asking price.

In Oklahoma our contracts call for repair allowances negotiated into the contract so we figure out net sheets that way at listing with a typical amount of repairs. Of ocurse it depends on condition of property as to what we figure.

Allowance for repairs.

Lower the price, the buyer pool will be larger.   Often the seller can't afford to do the repairs.

allowance. hands down as Evelyn said.