ultimately it is up to you and if your lender is happy to proceed without the warranty and your survey comes back clean then i'd say you're in an ok spot. as was said above after 7 more years the warranty doesn't matter anyway.
tbh, i'd have been a lot cheekier with the reduction than 20k. but it's a hard game to play if you really love the place and are worried they'll just pull out and not entertain further offers.