Personally, I’m against any kickbacks of any kind, as it distorts the comps — which is probably why they want to do it this way if they have other, nearby properties they need to sell. They don’t want “lower” (actual price) comps to bring down the perceived value of their REO (or other) inventory.
Like you’ve said, why pay taxes on the higher price? If you have the cash, make them discount the price.
