I am looking at a 2005 brand new xc sp 700 with reverse at a dealership local to me for $6500
out the door I am unsure if this is a good deal or not some insight would be helpfull.
What do you think I should counter offer??

I would keep shopping. There are alot of dealers sitting on sleds, and trying to sell them cheap. We just bought 2, '05 xc700's, for $5,150ea. + tax and license, and a '05 xc800 for $5,500 +tax and license. That was way cheaper than we expected to find them for.
Just call around and ask for their best cash price.
This is where we started, and found them cheaper everywhere we looked!
Bristow's, St Cloud, Mn has a
new '05 xc700 $6,150, http://www.bristowsinc.com

2 seasons in row here in the north east we havent had chit for snow , gas is sky high heating oil is out of site...... Dealers are hurting and have a PILE of 05 and 06 sleds.... Make a cash deal and NO trade you will be in the drivers seat !

I BOUGHT AN 04PROX2700 FOR 6600 OTD IN MARCH OF 04 YOU SHOULD BE ABLE TO BUY A LEFT OVER STOCKER 700 FOR 5000-5200 OTD NO PROBLEM GOOD LUCK