Remember Paul Harvey?  I'd want to hear "the rest of the story"...
I might say, "I appreciate your consideration and respect your decision, however, may I inquire - how do you define 'local expert' and what criteria was important to you in choosing a Realtor for this listing?"

What does the word "expert" really mean? Just because they live there? Anyone can call themselves the neighborhood expert but the proof is not only the actual knowledge they might have that no one else does, or the resources but other competencies. Is being the expert in that community going to sell the home? Not likely. What will sell it is correct pricing, knowing the local market conditions, understanding buyer behavior, appropriate preparation for the market, a written marketing plan with targeted marketing, and great skills as a negotiator.

I have to agree with Ron and Alexandra Seigel ...I live and market my community and have for 22 years..I'm visible, I sponsor activities and serve on school boards. I've sold many homes several times and have become known as the trusted resource. I know my list to sell ratio, have strong references from many residents who've used me many times and maintain a community website. Will I get all the listings? No and I don't want them. I sometimes am called to find out what I'd list a home for and then they use a friend and list at the price I gave them. All okay! Sure you can find out all the particulars but I already know who to call to have the gate open for an open house in the gated section. I have the deed restrictions on my community website, I have the floor plans for all the homes in the community because I saved all the builder floor plans when they were being built. I know the history of the community and the builders who built the homes. Appraisers call me because they know I know the homes and the differences between the sections and why some sections obtain a higher price. My strategy is to capitalize on my position as the visible local resource, my past consistent success and many see that value and give me the edge. I'd say Kenneth J. Jones has some good objection strategy to overcome my reputation as the most frequently Realtor in my community. Bring it on! LOL!!!

There's not really much more that they can do or know. It's more of a perception.

Living in the community can actually go either way. I'm getting a listing in a community where one agent dominates. I'm getting the listing because the seller doesn't particularly like that agent and feels she's too pushy.

Results are what matters. Familiarity is important but it is but one factor.

Everyone uses their criteria, it is up to us to convince them to use the criteria that we think is best.

that's a commonly heard dumb statement by homeowners who have an agent living in their neighborhood.... dumb.

I've lost out to that before too.  Had a friend who listed with someone who had a few listings in the area (no sales) and marketed herself as "the neighborhood expert".  People believe it if they see it and you can't fix stupid.

I see people on Nextdoor all the time recommending an agent who lives in our area, regardless of the fact that three other agents do as well.  I've been tempted to say "well if living in the area is the #1 qualification, contact me, Bobby and Sue we all live here.  Heck, I'm even on the board of the Country Club!"

Once they've done the hiring, there isn't much you can do.  If the decision hasn't been made yet, I'd stress that "I'm only a phone call away and can be there in X minutes" and that the majority of marketing is done online so where they live is not a relevant factor these days.

The family across the street and 1 door down from me (that knows I'm in real estate) listed with a Compass agent in Malibu (30-45 minutes away) who farmed the open house out to Keller Williams agents and has no sign on the property.  Sometimes living in the area has no impact at all.

Typically an agent that lives in the neighborhood has some conflicts with the fact that she has a vested interest in the community and may not be able to look at the area with objectivity.

I'd ask how the seller determined that this person is a "local expert". The term local expert is subjective at best. 

Some sellers don't realize the consequences of conferring that title on a particular agent. The "winner take all" mentality is not only anti-competitive, but it essentially gives control over market prices in a neighborhood or development to one company and one agent. Is that really what sellers want when they are competing with others in their neighborhood for a buyer?

They may have more knowledge of the property and the community, but what do they know about all the other factors involved? How well do they represent clients? How many homes have they sold? There is so much more to real estate than just knowledge of the home.

Perception is reality.  You can't change the consumer's perception of "who is the local expert", even when we, as Realtors, all know that any decent agent can handle most locations with equal success.

All you can do is shake your head in disbelief.

Sometimes the local expert can know too much ... and the seller is at a higher risk of non-dislcosure if the agent does not disclose what they know about the HOA.  It can work against a seller in a HOA community.  

Is she self proclaimed or...

Just because they live in or near a complex does not make them an expert. I have those type of agents here in my area that pester residents and acoust those who list with other agents. Listing is about service, i tell them what i offer and what makes me stand out

Each Seller has their own criteria they look for in an agent.. and some don't interview their agent to find out about theri knowledge and experience.. just because you live in same neighbourhood doesn't necessarily make you the expert.

Anyone can buy a sign rider for $5.00 that says "Neighborhood Expert". The logic of some sellers doesn't always make sense to everyone. Some hire a family member, a co-worker, someone who lives close by so they can go by and walk the dog if a buyer wants  to see the house while seller is at work, etc.

Thomas,

I have seen that happen on several occasions.  The difference is that the agent is out there in the community and is visible.  This agent may not be as savvy in terms of negotiations or other skills, but she/he understands the value of face to face.  

One of our clients is the undisputed expert in her neighborhood and she knows every home in the area.  She is on HOA board, participates in all the activities there, and she is constantly visible.  She has sold some homes 5 times in the area, she has at least 10 pages of solds in the community.  

I would become more visible and active to start with. There is nothing to dissuade someone  who believes that someone is the  "expert" .   You are going to have to wait for them to screw up, or come up with a different strategy.  

I'm sorry this happened to you but as others have answered -- after the fact, it becomes a learning experience.  

"What do you think the neighborhood expert will do that I haven't already shown you?"

"Is the expertise of a partiuclar agent you're only criteria for choosing who is going to represent you?

If I can show you how I will market your property to get the best exposure, the highest possible price which results in the best terms in the time that best fits with your schedule will you choose me?   Or is your mind already made up?"

No. Living in the community is not a qualifying element for the selection of an agent.

Welcome to my nightmare LOL

"We hired our Aunt who lives NY"

"We hired our friend who lives Georgia"

Thomas J. Nelson, Realtor, CRS Bring out the big guns. How many homes has she sold in the neighborhood? How many are listed? Historical facts will tell the story. It may be true, but the facts are in the proof.

Jeff Dowler nailed this one!

It's not, but that's the sales pitch and the perception.

Oh yeah... I'm about to list a home this month where the seller had been given my name but chose not to call me and instead selected an agent who "sold a lot" in the neighborhood. Six months later... zero, zip, zilch... and he's paid a big mortgage on an empty house. NOW he says he should have called me upfront. BTW, I checked out this agent he had... she has a lot of listings in the neighborhood... sales not so much and DOM very high. Big difference between listing and selling. Besides, what does "local expert" mean? At the end of the day, selling a home is about staging it, pricing it right, and marketing the hell out of it... what localism comes into play here?

Thomas J. Nelson, Realtor, CRS - good point and wish I can think of any objection strategy for this.

Checking other GOOD answers.

Apparently so.

It could be that that agent is an expert and has a great track record in the neighborhood. The stats will tell the story.

The local expert is necessary for the buyers' agent but, for the listing agent, you want someone who is highly skilled at negotiations AND provides top-notch marketing.  Sharing your list-to-sales price ratios and DOM works when you're competing in a neighborhood that one agent dominates too.

What Dorie Dillard said. 

Must have track record he is a all good around agent known to sell homes in the neighborhood.  

Not always!

Sadly some can't see beyond their nose.  They have a mentality set and just can't seem to realize we all are experts in our field. Unless we market to target areas, I don't see this changing.

The take away could be it's a catagory that consumers believe is important ?

With all other things being equal, and that is what we must use as the baseline, being resident in the community, perhaps even being a part of the management DOES have advantage.

You even admitted the outsider might need to make a call or two. 

That is like saying I can fix it if you give me a couple of chances. Who do you hire on that basis?

The resident DOES have the advantage and its up to them to exploit it. They did so successfully in your example.

There are also other reasons, but go beyond the scope of this discussion.

The most challenging HOA/Neighborhood we go up against is a large 55+ community that for decades owned their own real estate company.  The first office once inside the clubhouse is the realty office.  Since we don't live in that HOA, we cannot provide a tour of the Clubhouse to a prospective buyer - but they can.  They can then tell the prospective buyer that they know of every home that will be coming up for sale, even if they don't win the listing.  Thus, they slam-dunk a lot of transactions, Zero-Days on the market, mostly Full-price.  Skill - NO.  Location, Yes.

Each seller has their own criteria when selecting an agent.  What is important to one seller may not be important to another seller.

That could be a mistake fast.

I think self appointment as a neighborhood expert is nothing but talk and unless its backed-up with something more substantial .. I would counter their reasoning

Neighborhood anomalies and quirks.  Barking dogs, Nasty neighbors, seasonal issues. The zoo it becomes when the kids are all home for the summer. etc. . .

I heard this rejection too and it is not easy to address it, since those relationships are already established. Everyone wants to work with someone they can relate to, and here you come: outsider who does not ''understand'' as well all peculiarities of that particular house and community....:) 

public needs more education

Maybe yes ... maybe no. She could actually know more about the neighborhood & the sellers feel comfortable with her. Great marketing that you can't beat. She simply outmarketed you.

In my case, I actually try & elevate the prices in the neighborhood.

I live in a neighborhood that has an HOA. Sometimes I get listings, sometimes I don't. But VERY frequently I get calls from owners and their agents, just days prior to their closing, asking ME if I can provide them with the HOA rules and regulations. Because...I am indeed the neighborhood expert. 

For you, Thomas, I recommend that you gather all the neighborhood information into a booklet or packet or pdf. Have it at the ready at the next listing appointment. As others have said, meet the objection before it arises. Good luck to you! 

Let's look at the numbers. Is the local agent controlling a big market share or just a neighbor?

no