There are "contingencies' to look at in a Real Estate Transaction.
There is a financing contingency(appraisal and loan), and an inspection contingency(which includes pest inspections).
A buyer has many protections in the California Purchase Agreement and must release the contingencies.
Up until all contingencies are released, the buyer can cancel and have their Deposit returned to them.
After a buyer has removed all the contingencies( in writing) in the contract, the buyer is then obligated to move forward with the purchase. If they cancel the contract, (after signing a release of contingencies), the seller has the right to the buyer's good faith deposit , Being aware of a situation is not the same as releasing contingencies.