Real Madrid scent victory in their summer-long pursuit of Luka Modric and they not only expect to complete his signing in the coming days but intend to do so for rather less than Tottenham Hotspur's £40m asking price.

José Mourinho, the Madrid manager, has grown frustrated at his club's inability to bring a swift conclusion to the affair, which would have allowed him to integrate Modric in his preparations for the new season.

But Madrid have finally made a break-through in the talks with Tottenham that had long since felt entrenched, despite the London club being willing to sell Modric this summer at the right price. A year ago they refused to sanction his release under any circumstances and rejected a package worth £40m from Chelsea.

Modric's disillusionment has reached new depths. He refused to go on Tottenham's pre-season tour of the United States, a show of dissent for which he was fined and, such is his state of mind, the manager, André Villas-Boas, has exiled him to train away from the first-team squad.

The sticking point has been the fee, with the Tottenham chairman, Daniel Levy, holding out for as close to £40m as possible and Madrid refusing to go much higher than £30m. Madrid have attempted to offer players in part-exchange, including the Turkey midfielder Nuri Sahin, who is now close to joining Liverpool on loan, but Tottenham said that they wanted cash only.

The Madrid president, Florentino Pérez, has been confident throughout the summer that he would get his man and the indications from Spain on Wednesday were that the initial fee could be as low as £26m, albeit before add-ons. Tottenham can be expected to claim that the sum is greater.

Tottenham need the money to allow Villas-Boas to complete his squad. His priorities are a new striker and a replacement for Modric, with Porto's Joao Moutinho and Yann M'Vila of Rennes prominent in his thoughts. Moutinho, though, may prove too expensive at €30m (£23.5m). Tottenham have had a bid of £12m turned down for M'Vila while they were unsuccessful with a €16m (£12.5m) offer for the more attacking midfielder, Gastón Ramírez, of Bologna.

"There has been contact and communication with the clubs," he said. "The team of people behind myself are working very, very hard in relation to those targets."