I don't mind paying a couple hundred extra on the mortgage that is going to equity but it's a tough pill to swallow when it going to the bank in the form of higher interest rates.   

Take a chill pill and STFU.

It sounds like the project is in the luxury market, and the price reductions in this market are prevalent.

During my inspection I'll make sure to check the costly items closely,I'll be ready to ask for a price reduction if one of these is at the end of its use.

A lesson I've learned in negotiating for people who are going to live in a property is to ask the seller to do all the repairs instead of asking for a price reduction.

This makes me feel more comfortable buying in Las Vegas right now...I'd be making 10% CoC return roughly with the right deal, with low probability of a significant price reduction in the future.

Or is it considered a price reduction, lowering your cost basis in the property?

In those cases you might be able to negotiate more (perhaps a lot more off the price) especially if their listing agent hasn't been diligent in getting price reductions as time passes.

The difference in the end may be a slight reduction in rates based on history.

After two price reductions I finally got it rented, but it is still rented for about 20% above comps in the market.