Yes, you need to be able to see the problems that need to be fixed, but seeing them worse than they really are is extremely self- sabotaging.
So what do you do if your client has this tendency to do this all the time?
Be straight with them. Let them know how you see the problem and how seeing it worse than it is is a tendency some clients have, them included.
Ask them if they can think of a time when they have done this before (this behavior is rarely a one time thing and awareness is key to changing this negative mind pattern).
Ask them to share their problem with another trusted friend and get their opinion on it. This will help the client gain other perspectives of the same situation.
For the most part very few clients have this tendency to this extreme. Many of these people rarely seek a coach out as they do not belief their life can possibly benefit from one (how wrong they are!).