United are reluctant to pay Wigan's asking price of £16 million even though it is understood that Valencia, the Ecuadorian winger, would prefer to stay in the Premier League.
According to the Daily Mail, the two clubs made an initial agreement about the transfer last December but Sir Alex Ferguson's scouts were underwhelmed by the 23 year-old's performances in the second half of the season and as such are questioning his value.
Real meanwhile are understood to have offered the asking price last month, and despite their pursuit of Bayern Munich's Franck Ribery and United's Cristiano Ronaldo, remain interested in Valencia.
Valencia's agent, Diego Herrera, said: "I cannot confirm the news that Manchester and Madrid have made bids because I haven't spoken with Wigan yet.
"I will be in touch with them st the start of the week, hopefully on Monday. Of course this is great news because it is the right moment for Antonio Valencia to join a bigger club and start a new challenge with a great team.
"He has proved himself in the Premier League with Wigan and is definitely good enough to make the step to something bigger.
"They are both great football clubs and making a decision is tough."
Meanwhile, Steve Bruce, the former Wigan manager who recently switched to Sunderland, is understood to have expressed interest in signing Titus Bramble and Lee Cattermole from the JJB Stadium club.