Seller to provide checks to vendors of buyers choosing at close? (TN)

Has anyone heard of anything like this?

We are under contract for a home and took our realtors suggestion to ask for vendor checks at closing to go towards some much needed cosmetic upgrades. We don't need money to go towards our closing costs since we have a 30,000 401k loan to cover them. I'm using the 401k loan to cover closing costs because funds from an estate probate will arrive later this year, allowing us to pay off that loan without losing any of our savings.

The funds from the loan can only go towards closing costs. The purchase price is 360k, the seller is paying 2.4% of our buyer agents fee. The checks are not part of concessions from what my realtor told me. The lender and the title company have approved the deal. 12k would be over 3% of allowed commissions. This was all put into the counter offer they ended up accepting.