I think what RESPA is trying to prohibit is the Seller telling a Buyer, "I will only agree to sell you the property if you buy your title policy from XYZ Title Co." The Seller probably can say "I will pay half of you costs if you close at XYZ Title Co." In that case, he is still permitting the Buyer to choose a different title company, if the Buyer is willing to pay for the title policy himself.
Of course, this may present a Section 8 problem if there is a kickback involved.
Like any contract, everything is negotiable. The parties can agree to any arrangement they like, so long as the seller is not requiring the Buyer to use a particular title company as a condition of the sale.
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