The £115k-per-week favourite could leave Real if president Florentino Perez accepts the offer ‘put on the table’ from Pep.
City have been keen on Isco for some time, with their manager deeming the 26-year-old as the last piece of the puzzle in midfield.
The Spanish international could pull the strings and would be a replacement for the ageing David Silva.
Signed by Real from Malaga in 2013, Isco has gone on to make 237 appearances for Los Blancos in all competitions.
The talented midfielder has been a regular this season, racking up 46 appearances in La Liga, the Champions League, Supercopa, Copa Del Rey, Club World Cup and UEFA Supercup, but he’s said to be upset after being substituted so often.
Perez could be tempted to accept City’s offer, risking the wrath of supporters, which leaves Isco unsure of where his future lies too.
If manager Zinedine Zidane and the club president consider him dispensable, a summer exit could well be on the cards. Guardiola’s £88.5m offer might be tempting for all parties.
Stats from Transfermarkt.