Michael Becker has stated: "Nothing has been signed, but there will be ongoing contact with Chelsea. There is strong interest from both sides.
"The trend is in this direction (to move to Chelsea).
"Michael had initially been very keen on Real Madrid. But the leadership changes there in the last few months mean we don't know what's happening."
Real sacked coach Wanderley Luxemburgo in December last year and their president, Florentino Perez, stepped down earlier this week.
Becker said: "There has been a change in the whole set-up at Real and we don't know where we stand - it's very confusing."
Ballack, 29, will be a free agent in the summer when his contract at Bayern Munich expires.
"Michael will continue his career with a side that will win the Champions League," the agent aded.
"He definitely will not go to Inter Milan. He would only move to a club where he has a better chance of winning the Champions League than at Bayern.
"Inter are currently third in Serie A, whereas Bayern are top in the German league."