Just about everyone in the real estate business is feeling the pinch -- if they are still even in business, that is.

The City of Lake Forest has been no exception. In fact, in 2008 sales were even worse in Lake Forest than in surrounding North Shore communities.

The city government was feeling the pinch, too. As in most municipalities, real estate transfer taxes are a lucrative source of revenue. Every time someone buys a home, a percentage of the sales price, the city tacks on a transfer tax.

In Lake Forest, that amounts to $4 for every $1,000 in sales price. Whereas the city normally expected to earn $1.2 million from the transfer tax, those revenues dropped 30 percent, according to Mayor Mike Rummel.

Last fall a group of real estate professionals decided they had had enough and they weren't going to take it any more.

They approached Mayor Rummel, who spearheaded a coalition of real estate stakeholders to discuss the problem and come up with solutions.

After months of meetings, discussions and scribbles on whiteboards, the group came up with a plan. Their program launched March 3; several weeks later neighboring Lake Bluff joined.

And while it's too soon to point to cause and effect, residential real estate contracts are up 21 percent over the same 30-day period a year ago.

Their approach combines cash-off incentives along with a push for more realistic pricing, education and public relations for the town. It's innovative, buzz-worthy, and they think, unique.

"We are not aware of any community doing this," said Susan Kelsey, economic development coordinator for the city.

At the heart of the three-month program is a list of participating professionals -- real estate agents, home inspectors, title companies, lenders and attorneys -- who are offering discounts on their services.

Also, the city has agreed to give buyers a $500 gift certificate good for use anywhere in Lake Forest, which works effectively like a rebate on the transfer tax.

"Let's say the average real estate transfer tax payment was $4,000," Kelsey said. "That means we still get $3,500 and the rest of the money is spent in Lake Forest."

The whole incentive package might be worth $1,500 to a typical buyer, she added, not including the price drops the home seller may have made.

Even though the city could benefit if transfer taxes spike back up, Rummel says the city did not kick in the gift certificate to spur transfer taxes.

"It had nothing to do with our budget," he said, "and more with being a team player."

Kelsey admits that to the average Lake Forest buyer of a $1.4 million house, the roughly $1,500 in incentives is not going to make or break a decision.

"But people working together could build some positive energy and give us a story to tell," she said. "And that's what's happened. People have gotten excited about it and it's contagious."

Word of mouth is also helping sellers and their agents come up with better pricing on homes, said Deborah Fischer, an agent with Koenig & Strey in Lake Forest.

"That was a big part of it," she said. "Prices have to be in line for people to recognize they are getting value. A few weeks ago, I did a look at median list price in spring 2009 vs. median in spring 2008.

"[The average price in] Lake Forest was down $100,000 this year and listings were comparable."

Another part of the coalition's program is a free seminar to be offered April 22. "Real Estate Values: The New Reality" will host two speakers, Paul Kasriel, chief economist of the Northern Trust Co., and Steven Hovany, president of Strategy Planning Associates.

Finally, the group is starting a public relations campaign that they feel will help spur enthusiasm for buyers. Their theme, "Growing our community -- together" is designed to help newcomers feel welcome.

In just a month, sales seem to be nudging upwards, Fischer said.

Fischer researched contracts between March 3 and April 3 2009 and compared them with contracts taken in the same time period last year. Last year at this time, 19 properties took contracts; this year 23 properties went under contract, a gain of around 21 percent. Of the homes currently under contract, 10 are listed at $500,000 or less.

While it is too soon to tell if the combination of incentives and enthusiasm is the reason for the increase in sales, the buzz is positive, say those involved.

"It does seem as if activity is picking up," Fischer said. "Appointments are up, even though so many people have been out of town on spring breaks. What we are seeing is that proper pricing is key to a successful sale, because buyers are starting to buy again."

Would the Lake Forest coalition's program work other places?

"You need to pull people in a room together and think about how you can positively impact the market and customize it to your community," Kelsey said. "This evolved over six months in fits and spurts. Eventually we came out with what works for Lake Forest."

Find out more about the Lake Forest initiative: http://www.lakeforestvoices.org/.