At the end of September, Balian rode out with an embassy to meet with the sultan, offering the surrender that he had initially refused. Saladin would not accept this, seeing that as they spoke, his men had scaled the walls and planted their banners. Soon, however, the crusaders repelled their attack. Saladin acquiesced, and the two agreed that the city would be handed over to Saladin peacefully. The sultan allowed a ransom of twenty bezants for men, ten for women, and five for children, but those who could not pay were to be sold into slavery. Balian argued in vain that there were far more people who could not pay, as there were perhaps as many as 20000 refugees from elsewhere in the kingdom.
After returning to Jerusalem, it was decided that seven thousand of the poor inhabitants could be ransomed from money drawn from the treasury that Henry II of England had established there, which was being guarded by the Hospitallers. This money was meant to be used by Henry on a pilgrimage or a crusade, in penance for the murder of Thomas Becket, but the king never arrived, and his treasury had already been used to pay mercenaries for the Battle of Hattin.
Balian met with Saladin again and the sultan agreed to lower the ransom to ten bezants for men, five for women, and one for children. Balian argued that this would still be too great, and Saladin suggested a ransom of 100 000 bezants for all the inhabitants. Balian thought this was impossible, and Saladin said he would ransom seven thousand people for no lower than 50 000 bezants. Finally it was decided that Saladin would free the seven thousand for 30 000 bezants; two women or ten children would be permitted to take the place of one man for the same price.Surrender of the city
Balian handed over the keys to the Tower of David, the citadel, on October 2. It was announced that every inhabitant had about a month to pay their ransom, if they could (the length of time was perhaps 30 to 50 days, depending on the source). Saladin was generous and freed some of those who were forced into slavery; his brother Saphadin did the same, and both Balian and Heraclius, not wishing to be seen less generous than their enemies, freed many others with their own money. Saladin also allowed for an orderly march away from Jerusalem and prevented the sort of massacre that had occurred when the crusaders captured the city in 1099. Even Heraclius, who
ed the Muslim chronicler Imad ad-Din al-Isfahani by hoarding all his wealth and the treasures of the church instead of contributing to the ransom of the poor, was escorted from the city unmolested. The ransomed inhabitants marched away in three columns; the Templars and Hospitallers led the first two, with Balian and the Patriarch leading the third. Balian and his family were permitted to flee to Tripoli.