Here’s my translation

Alan

Þá gekk Hrafn til dura ok beiddi Þorvald, at hann gæfi grið konum ok börnum til útgöngu, "en vil ek bjóða þér fyrir mik þat, sem þú vill hafa." 
Then Hrafn went to [the] doorway and requested Þorvaldr, that he (Þorvaldr) grant a truce to [the] women and children for-the-purpose of a going-out (a safe exit from the house), „but (and) I want to offer (bjóða, Z1) you for my-own-part that which you want to have.“

Þorvaldr svarar engu.    
Þorvaldr answers nothing.

Hrafn mælti: "Þat vil ek bjóða þér at fara í brott af landi ok ganga suðr til hjálpar hvárumtveggja okkrum ok koma aldri aftr til Íslands, ef þér þykkir þinn sómi meiri en áðr." 
Hrafn spoke: “I will offer (bjóða, Z1) you that, to (ie that you) journey away from [the] land and to go south [on a pilgrimage] for [the] help (benefit) of each-of-the-two of us and to come never back to Iceland, if your honour seems to you greater than before.”

Þorvaldr neitaði þessu.    
Þorvaldr refused (said no to) this.

Þá bauð Hrafn at gefa sik upp til friðar öllum mönnum öðrum, þeim er þar váru í bænum, at hann væri eigi brenndr.    
Then Hrafn offered (bjóða, Z1) to give himself up for-the-purpose-of peace to all other persons, those who were there in the-farmhouse, [so] that it (ie the farmhouse, <boer>, masc noun) would not be burned.

Þá svarar Þorvaldr: "Ek mun lofa öllum mönnum út at ganga, ef þér selið af hendi vápn yður öll ok leggið þá á mitt vald, hvat ek vil af hverjum gera. 
Then Þorvaldr answers: ‘I will allow (<lofa>, Z2) all persons to go out, if you hand-over (lit: deliver from [the] hand) all your weapons and [you] cede them (<þá> masc acc pl = <menn>, ie the people, ) to my authority, [for] what I want to take (extort, göra e-t af e-m, Z13) from each.

Þetta váttar Guðmundr skáld:
Guðmundr [the] scaldic-poet affirms this:

[Option A]

   Bauð til friðkaups fróðum
Offered (bjóða, Z1) for [the] purchase-of-peace – for [the] learned (ones)

   folkprýðandi lýðum,
[The] exemplary-person (model, paragon, ie Hrafn) (Lex. Poet.) – for [the] persons,

   hann bað sveit fyr sinni
- he interceded for (<biðja fyrir e-m>, Z1) his company (community, ‘team Hrafn’)

   snjallri, einn at falla.
brave (excellent), - alone to fall (die).

[B]  Folkprýðandi bauð at falla einn til friðkaups fróðum lýðum.     Hann bað fyrir snjallri sveit sinni.
[The] exemplary-person (model, paragon, ie Hrafn) (Lex. Poet.) offered (bjóða, Z1) to fall (die) alone for [the] purchase-of-peace for learned persons. He interceded for (<biðja fyrir e-m>, Z1) his brave (excellent) company (community, ‘team Hrafn’).

[C]  Sá fyrirmyndarmaður bauðst til að láta líf sitt einn til þess að kaupa öðrum mönnum frið. Hann bað fyrir sinni snjöllu sveit.
That exemplary (model)-person offered-himself for [that], to forsake his own life for that, to purchase peace (personal security) for other people. He interceded for (<biðja fyrir e-m>, Z1) his brave (excellent) company.

Þá seldu þeir af hendi vápn sín öll ok gengu út síðan, karlar ok konur. 
Then they handed-over (lit: delivered from [the] hand) all their weapons and went outside after-that, men and women.

Þá er Hrafn kom út, var hann tekinn ok haldinn. 
Then when Hrafn came out, he was taken and held.

Sturla Bárðarson, systursonr Sturlusona, var ok haldinn, þriði maðr Þórðr Vífilsson, en allir menn aðrir, konur ok karlar, váru leiddir í kirkju ok byrgðir þar. 
Sturla Bárðr’s-son, nephew (sister’s-son) of [the] sons of Sturla (?), was also held, [and] a third person (man) Þorðr Vífill’s-son, but all other persons, women and men, were lead into [the] church and shut there[-in].

Þá lýsti Þorvaldr yfir því, at Hrafn skyldi taka af lífi.    
Then Þorvaldr proclaimed that, that [he, one] should take Hrafn from life (ie put him to death)

Ok er Hrafn heyrði þann dóm, þá beiddist hann at ganga til skriftar ok taka þjónustu, ok hann gekk til þjónustu við Valda prest ok mælti skriftagang ok tók corpus domini ok fell til bænar ok felldi tár með mikilli iðran. 
And when Hrafn heard that judgement, then he requested-for-himself to go to confession and take Holy-Communion, and he went to Holy-Communion with Valdi [the] priest and spoke confession and took ‘corpus domini’ (Body of the Lord/Christ) and fell to prayer and shed tears with great repentance.

Þá kvaddi Þorvaldr Kolbein Bergsson at vega Hrafn, en hann kveðst þat eigi vilja. 
Then Þorvaldr summoned Kolbeinn Berg’s-son to kill Hrafn, but he (ie Kolbeinn) declared-of-himself not to want that.

Þá mælti Þorvaldr við Bárð Bárðarson, at hann skyldi vega Hrafn. 
Then Þorvaldr spoke with Bárðr Bárðr’s-son, that he (ie Bárðr) should kill Hrafn.

Þá lagðst Hrafn niðr á kné ok ölnboga ok lagði hálsinn á eitt rekatré, ok Bárðr hjó af honum höfuð þar við trénu. 
Then Hrafn lay-himself down on knee(s) and elbow(s) and placed the (his)-neck on a certain drift-tree, and Bárðr hewed [his] head from him there against the-tree.

Hrafn hrærði hvorki hönd né fót, er hann sæfðist, heldr lá hann á knjánum ok ölnbogunum, sem hann var vanr at liggja til bænar. 
Hrafn moved neither hand nor foot (arm nor leg), when he was-put-to-death, rather he lay on the-knees and the-elbows, as he was accustomed to lie for prayer (gen. sg).