The Spurs chief would be prepared to let the Croatian playmaker leave if a deal was done with enough time for him to bring in 'four players and have a better team'
The Croatian midfielder has been linked with a move to Chelsea throughout the summer, but Spurs chairman Daniel Levy has maintained that the player is not for sale.
Redknapp, whose only first-team signing this summer has been goalkeeper Brad Friedel on a free transfer, would use the cash generated from Modric's sale to reinvest in his squad, but insists the playmaker will not move in a deadline day deal.
"We've got two options with Luka," Redknapp said.
"Either we keep a fantastic player or we sell him, get the money and bring in four players and have a better team.
"I want him to stay but if he's going I want the opportunity to get other players in.
"There's no chance the chairman [Daniel Levy] will sell him on the last day of the transfer window. He did that with Berbatov a few years ago and ended up with no strikers. He won't do that again.
"It's a difficult situation for Modric. We all love our club and everything, but what would you do if someone offered to treble your wages?
"He's had his head turned by the chance to play in a team that could win the Champions League this season and I think people can probably understand that.
"I'm sure there's still stuff going on with Chelsea and we have to be careful not to say 'he ain't going anywhere' and then he leaves.
"But the chairman has taken the stance that he doesn't want to lose him and I can't see that changing."
Redknapp has admitted he may have to sign players even if Modric stays, with his midfield plagued by injuries going into the new season.
He explained: "We need to do some business because some of my players are nowhere near being ready.
"People like Luka, Gareth Bale and Rafael van der Vaart are looking to see if we're going to bring in a couple more quality players. They want to be successful and they know we need to improve."Jake Livermore is the only central midfield player available.
"I'll have to invent a totally new formation. We can't start the season with Jake as our only midfielder. We have to do something soon.
"We finished two points above Liverpool and they've just spent £100m on new signings to close that gap.
"We need to improve our squad just to fend them off, never mind catching the four who finished above us."
Tottenham have been linked with several midfielders over the summer but could be on the brink of bolstering their forward line.
Emmanuel Adebayor is expected to join on loan from Manchester City this week, and Redknapp has reiterated his belief that the White Hart Lane faithful will accept the signing of the former Arsenal man.
He continued: "I'm sure they will take to him because he fell out with Arsenal. Arsenal fans hate him so Tottenham fans will love him. He upset them so he'll be a hero here."