Bayern Munich are set to make James Rodriguez's deal permanent before end of this year.
The midfielder is midway through a two-year loan deal at the Allianz Arena but Bayern are prepared to pay £37million to keep him.
James' agent Jorge Mendes will travel to Germany to complete the negotiations over a deal.
The Colombian player had been at Real Madrid for just three years. He was signed by Real Madrid from Monaco for £71m in 2014.
James hasscored two goals in four Bundesliga games during this season. Last season, he scored eight times as Bayern went on to win their sixth successive Bundesliga title.