Normally the agent would just reduce their fee and not give you a "kick back" of their commission (which is illegal if you are not also a liscense RE agent) even it it was used against closing costs. I understand what you were trying to accomplish however it was not "kosher" and the broker they work for should have not allowed it.
Now you are stuck with a 1099 that should not have been issued. That amount should reduce your basis in the home and not be considered earned income. What you should do is get the RE agent to take back the 1099-NEC if they will. On their return they can negate the income by calling what they "paid you" another way ... as a sub contractor is not correct.
