Real have won the last three Champions League titles, with the most recent triumph coming last May against Liverpool in a 3-1 victory.
But, since then, much has changed for the Spanish side as Cristiano Ronaldo departed for Juventus during the summer.
However, a push for a fourth consecutive Champions League is still very much a possibility as they prepare for a second leg against Ajax on Tuesday, having earned a 2-1 result in the first leg.
Seedorf, who played for both Ajax and Real Madrid throughout his legendary career, says Santiago Solari's side are very much contenders to win once again, laughing off the suggestion that they should be written off due to recent results.
"Last year was the same question," Seedorf told Goal .
"If a club has the cups it has, you have to think that Real Madrid is always capable of reaching the final and winning it.
"Who was going to say they were going to win three in a row? Impossible! Because it never happened. Not even two in a row.
"So, of course, they are capable. Football never ceases to amaze us. Knowing that, it will be very difficult, but you can not rule out Real Madrid."
Real Madrid are seen as a club in transition currently with younger stars like Vinicius Jr and Sergio Reguilon beginning to break through.
Gareth Bale, Marcelo and Isco have widely been linked with moves away, but Seedorf says the club must do whatever it takes to maintain the level at which they've played over the last several seasons.
"I do not know if they will have a change. What I always say is that young people need older people to develop their game, grow as people, and understand what Real means," Seedorf said.
"And the club has done well because they have kept key players, and they are being competitive: third in the league, alive in the Champions League, eliminated in the semi-finals in the Spanish Cup but against Barcelona, which is not a shame either for any of them.
"Then I think that, having won so much these past years, they are having a decent year. A year where they remain competitive. Now, to demand that young people now be those who maintain all this capacity of the past few years of going and winning everywhere, it's not so easy. It is not so simple.
"They have to build the group again with patience, where it is a moment of reflection for those players who have been a part of the story, and who can shine again, and the young people giving their energy.
"Those players (Vinicius and Reguilon) I think they're giving it. But, when you play against Barcelona and other great teams in the world, you can lose. It happens. You can not always think about winning everything and forever.
"Everyone would like it, but you also have to know how to accept with intelligence the moment the club is going through. It is essential to get back to an important level."