"One family member said $3 million, another said $5 million. My guess is that it will be somewhere in between," Jackson family friend Stacy Brown told ABC News.
See photos of Jackson and his kids through the years.
As part of the settlement, Rowe will reportedly get visitation rights to the kids. Katherine Jackson will remain their guardian, as named in Michael Jackson's 2002 will.
(Michael is also father to Prince Michael II, a.k.a. Blanket, who was born to an unknown surrogate.")
Look back at Jackson's most unforgettable moments.
Brown says the deal would not prevent Joe Jackson from seeing the kids, but multiple sources told ABC News that Rowe is insisting on a clause that prevents him from ever being named their guardian.
A source told ABCNews.com that Rowe was considering fighting for custody because she felt Katherine was too old to properly care for the children and "there is concern about Joe Jackson being around the kids."
See Michael Jackson's life in photos.
(Michael and his father had a contentious relationship. In a 2003 documentary with Martin Bashir, Jackson said his father beat him with "ironing cords, whatever's around...throw you up against the wall, hard as he could.")
A custody hearing originally scheduled for July 13 was postponed to July 20.
"We are pleased that the child custody hearing has been continued over until July 20 to further our progress and allow us to privately and amicably resolve this most important matter in a dignified manner for the benefit of the children first and all involved," Katherine Jackson's lawyer, L. Londell McMillan, said in a statement to The Associated Press.
Check out more photos of stars in court.
The New York Post, which reported Rowe was to receive a $4 million settlement, says the agreement, "takes away any rights she has to challenge custody at any given time...this would be it."
If Rowe's deal is finalized, it wouldn't be the first time she was paid for for giving up custody.
In transcripts from a 2005 custody hearing -- around the time Jackson was acquitted on molestation charges — Jackson's lawyer says the singer paid Rowe "about $4 [million] or $5 million up front, gave her a mansion in Beverly Hills, and then was to pay $900,000 a year for a number of years if she abided by agreement terms."
Meanwhile, ABCNews.com reports that child welfare officials recently interviewed the children at Katherine's Encino, Calif. home.
"This isn't that unusual," Laurie Levenson, a professor of family law at Loyola University, told the network. "It might have been a request by the court. We shouldn't read too much into it."
Authorities also interviewed Jackson's kids after a 2003 accusation that he'd molested an adolescent boy.
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