Offer less but if he doesnt budge that is a nice bike for $400. Those wheels look the same as the ones on my 1600 (Bontrager Selects). There were a few that were bad but mine never have given any trouble. Also a craigslist steal I mean find. $500 gets you a lot of "warranty" work done.

http://www.trekbikes.com/us/en/bikes/2007/archive/1600