Nextdoor neighbor is offering to buy our house

[usctrojancpa]

This is why it's best to engage a competent Realtor. Family/Co-worker/Neighbor sales are akin to dancing with reckless abandon through a minefield. Eventually something is going to go catastrophically go wrong, and to what extent the damage ends up being is a true wildcard. A Realtor will cost X in this case, but that X comes with guidance, experience, access to sales contracts, access to known professional services (inspectors, etc), and keeps you from having any "splash-back" if and when this spins out of control.

A polite "Thanks for the ask. No at this time. Should we revisit this at a later time, we would want to engage a Realtor" or something to that effect is how I'd handle this. Your neighbor will understand as I'm sure they would want the same sort of protections when making a purchase of significance like this.

My .02c

Well...if the parties agree on a price...a lawyer will do just fine.  Many will probably charge a flat fee to deal with the paperwork.

Of course, you are looking for a bidding war...you will need an agent but redfin also works.

A realtor can handle a transaction like this much more efficiently and efficiently than a lawyer.  I've done a few of these type of transactions over the years and only charged 1% to Shepard the process through the finish line.  Not only that, but I get escrow fee and owner's title discounts for my sellers (I doubt lawyers can get that for sellers as most all realtors don't). 

That being said, if you are not ready to sell just politely state that.  If you are open to selling that come back at them with a price that is higher than the market and then include a rent back clause for X number of months or you could make the sale contingent upon you getting into escrow on your new home.  Lot of different ways to skin the cat here if you are open to selling at a higher than market price with almost no commission to pay.