In Austin and Central Texas, we have not had a time in recent years when we stopped seeing multiple purchase offers. Sometimes it is simply built into the chosen sales process -- public auctions and online auctions (a la HUD), for example. Those are special cases, but even "typical" MLS-listed properties can and do attract multiple offers, even in "down" markets. Active, attentive buyers know a bargain when they see one, so aggressively priced homes sometimes attract more than one prospective buyer.
As we enter the growth phase in our next market cycle, the number of properties attracting multiple offers is likely to increase. This article from SmartMoney.com includes some good advice to think about:
Having been through multiple offer situations many times, and from both sides of the table, I agree with this. I can tell my client -- buyer or seller -- what the market (recent sales and competitive active listings) say a property is worth, but ultimately market value is nothing more or less than what a willing buyer and a willing seller agree on. Moreover, there is almost always something other than dollars and cents that can make a difference -- being able to accelerate or delay closing, for example, or a buyer being willing to put more earnest money at risk, or a seller being able to help with a survey or repair costs.
For a professional negotiator, this process can be fun. For both clients involved, it can be a tense experience. It always boils down to finding the best balance of the interests of both parties -- the essence of good negotiation -- with the complication of more "unknowns" than usual.