The mediator’s location may be important, but often not as critical as many assume.
Travel costs may be involved, but these are often small in relation to the amount in dispute and the sums that will be spent if there is no settlement. The other party may be suspicious if you select a mediator in your locality (unless the other party is also in the same locality).
It is generally wise to consider the location of the mediator as a practical issue when reviewing a shortlist of mediators, some of whom are local and some not, rather than as a prevailing consideration at the outset. If the parties want a mediator to join them in their locale, or in some other place, keep in mind that some mediators charge travel expenses and travel time. This may, or may not, be a factor in choosing a mediator.
A neutral venue can be an important consideration, reflecting the neutrality of the process. Selecting an outside mediator and/or a neutral venue can be particularly helpful where parties are from different locations or where there is a high level of hostility, or where an obvious power imbalance exists.
In online mediations, location of the mediator is far less relevant, but other considerations may then apply – such as availability (e.g. in view of time zones) and their skills in mediating online.