Here is the argument that makes honest selling profitable rather than merely virtuous.
What a bidder does with an unknown
A bidder looking at an item with a shadow in one photograph, a vague "good condition", or a side that never gets shown does not assume the best. They do not assume the worst either. They assume something in between — and then they bid as if it were slightly worse than that, because they are the one carrying the risk.
That gap between what the item is and what they bid is the uncertainty discount. You pay it on every item where the condition is unclear, and you never see it, because it looks like the price simply being lower than you hoped.
What naming the flaw does
It replaces an unknown with a known.
"A 4mm chip on the foot rim, not visible when it sits on a table" is a smaller deduction than "something is wrong with this and I cannot tell what". Every bidder now prices the same thing, which is the chip.
The price goes up. Not because honesty is rewarded by the universe, but because you have removed a risk premium that you were paying.
This is why "sold as seen" reads badly
It does not transfer risk; it announces that risk exists and declines to quantify it. The room responds by assuming more of it.
Where it is strongest
Categories where condition is most of the value — cards, coins, comics, records, sneakers. In those, a described flaw and an undescribed one can be a multiple apart, not a margin.
The second-order effect
A seller who always describes the flaw builds a reputation that does the same work on every future item, including the ones with nothing wrong. "They would have said" is worth a great deal and cannot be bought.
More: how to describe condition, how an auction finds a price.