Hi Rusty and thanks for your question.
As Elena Talis pointed out, there are really only three (3) options in terms of your contract and how you can treat this new knowledge. And as Lance King and Bill McCord pointed out, however, depending on your contract (for example, if in trying to purchase the home in Cupertino--a very hot market, you agreed to waive contingencies), your options may be greatly limited without jeopardizing a part or all of your earnest money deposit.
Since the others have already talked about your options from a contractual standpoint, I'm going to elaborate a little on what Terri Vellios mentioned previously about what it means to find asbestos in your home...
First, there are still many homes in Santa Clara County that have asbestos within the property. From ducting to flues and pipes to acoustic ceilings within the interior of the home and garage, there is and always will be asbestos. Asbestos, as a product, was removed from acceptable housing materials around the mid-1970s, so if the home is older than 1970, chances are high that somewhere within the home, there is asbestos. So long as asbestos is not nicked or damaged (a condition that is called making the asbestos "friable") or is encapsulated with another product (for example, paint over acoustic ceiling), my understanding in talking with experts is that is should not present health hazards to you or to your family. Removal of asbestos is a fairly common construction job today, and, while not cheap, it is certainly not hugely expensive either. In most cases, asbestos can be safely removed in about a day with minimal inconvenience to the homeowner.
So you have options regarding how to treat the asbestos. It all boils down to your own personal comfort level with having the asbestos in the home. By the way, older homes have a plethora of materials within them that might be considered hazardous today that was not previously so when the home was built. Dealing with these issues as they crop up during your ownership is part of maintaining an older home--believe me, I know, I, too, own an older home.
Now, more importantly, before you consider your next moves, it's time to sit down with the experts--your home inspector, an environmental hygenist, your contractor, your agent and, if necessary, your real estate attorney to determine what are your options. We can all tell you, generally, what you can do, but none of us is in your contract or knows any specifics about your contract--that's why you have a Realtor to help you. Work with your agent and your team of specialists to get a better idea of how to address the asbestos. Remember, it can be removed fairly easily so you have options if you really like the home.
Contact your agent today, and work out a plan for which you're comfortable in addressing your problems with the home.
Allison James Estates & Homes