A five-figure compensation fee will be paid to the Dumfries club, who also want a Hearts youngster on loan as part of the agreement.
Reilly has verbally agreed to join Hearts with Queens resigned to losing the 22-year-old, who scored 15 goals in 39 games last season. The Dumfries club are entitled to a development fee having brought the striker through their youth system, but Hearts refused to pay the six-figure fee they initially wanted.
The compromise is likely to be a season-long loan for one of Hearts’ promising young players in addition to a more modest fee. Gary Oliver is to be loaned out next season and Queen of the South are interesting in taking him in place of the departing Reilly.
Hearts could complete the signing of Reilly as early as next week, with the Palmerston Park chairman Billy Hewitson admitting Queens will not prevent the player moving to Edinburgh.
“It will definitely happen. We’re in advanced negotiations with Hearts to conclude the deal,” he said. Robbie Neilson, the Hearts head coach, explained that he planned to loan Oliver out in any case. “Gary is one we will try and get out on loan if we can so that he can come back and play week in and week out for us,” he said.
“One or two of our younger guys will go out on loan. The boys know the situation. A couple of them need a bit more development time so they will go out on loan at a suitable level.
“None of our strikers are going to play 35 or 40 games this season. We’ll do what we did this season and try to get the best out of them by playing 15, 20 or 25 games maximum. That way we can keep them fresh.”