DIAGNOSIS The infrared (IR) LEDs for night vision are likely reflecting off something too close to the camera lens, causing "IR bleed" that washes out the image.
FIX Look at the camera's physical placement. Is it sitting on a shelf right against a wall? Is the lens very close to a window or glass surface? The IR lights ring the lens. You need to give it at least 6-8 inches of clear space all around the front of the camera. Move it away from any nearby surfaces and angle it slightly downward towards the area you want to see.
IF THAT DIDN'T WORK There's a small plastic film over the lens and IR LEDs for protection during shipping. Sometimes it's hard to see. Power off the camera and feel carefully around the lens for a thin, clear tab. If you find one, peel it off completely.
HEADS UP Night vision needs *some* ambient light to work best, even if it's light you can't see. Pitch-black rooms will always be grainier. Also, avoid pointing it directly at a light source or highly reflective object like a mirror at night.