This feature helps you save time and connection bandwidth.
However, sometimes the Steam local file transfer not working issue may happen.
Fix 1.

Go to Steam and select theSteamtab in the top right corner.
In the drop-down menu, selectCheck for Steam Client Updates.
Then Steam will automatically check for any available updates.

Download and install it if there are any.
Fix 2.
Check Steam Downloads controls
The transfer tool on Steam is always enabled automatically as its default setting.
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Go tothe Steam app > Steam > Settingsand press theDownloadsoption in the left menu.
Step 2. verify if theGame File Transfer over Local Networksection is enabled or not.
Fix 3.
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Verify the Integrity of Game Files
Step 1.
OpenSteamand go to theLibrarysection.
Right-hit the game you want to transfer and choosePropertiesfrom the shortcut menu.
Under the new popup, selectInstalled Filesin the left sidebar and then click onVerify integrity of game files.
After finishing the file verification, relaunch your Steam and try transferring games again.
Fix 4.
Therefore, you’re free to temporarily kill the antivirus software and the firewalls on both your devices.
Then run Local web link Game Transfer again.
If this method doesnt work, attempt the next one.
Guide on how to disable antivirus on Windows 10.
Learn how to turn off antivirus like Windows Defender, Avast, other antivirus temporarily or permanently.
Fix 5.
That way, deleting cached files may fix the issue.
Open theSteamapp, and go toSteam > tweaks > Downloads.
Do you want to know how to clear cache on Windows 10/8/7?
Now, you might read this post to learn some solutions based on different situations.
Thanks for your support.