A Dunedin City Council resource consent committee granted consent in May for Adrienne Clear, the owner of the property at 15 Marion St, to remove the tree.
Neighbours Scott Macdonald and Alison Turner lodged an appeal to save a tree they believe is an asset to the community.
Council resource consents manager Alan Worthington said this week the council was seeking to resolve the appeal without it being heard by the court.
"We have approached the appellant before the court gets around to arranging formal mediation," he said.
An independent arborist would assess the tree, the third assessment that would be done.
It is the second time Ms Clear, who wants to build a house on the site, has applied for consent to remove the tree.
She also applied for consent in 2004.
At issue is the health of the elm, which is listed as a significant tree in the city's district plan.
The consent committee decided that because of a wound in its trunk, the tree was fundamentally unsound, in part because of a failure to carry out due maintenance and pruning.
Part of it could fall on to the site, posing a significant risk to people and property.
Ms Clear said she was "very, very disappointed" about the situation.
She realised the tree was protected when she bought the property, but did not realise it was diseased.
Her plan was to build a house where the tree now was.
Mr Macdonald, whose appeal claimed expert evidence on the tree was flawed, did not wish to discuss the matter when contacted.
