Hi all, I am looking around to buy my first house for living. I just found a good town house with reasonable price (850k) at a very good location in Bay area. The seller even dropped the price by 20k recently after it had been in the market for a while. However its inspect report shows that it has drywood termites and fungus in in the wall of garage and some places in the house. The wall was made of wood btw. In the disclosure report, a pest controller estimated the cost to fix the termite issue is > 10k.

Although my agent tried to convince me that it is not a big issue as in California termite is just normal for any house older than 30 years, I was still scared and decided to not pursuing this house.

Could you please tell me if what my agent said is true? I read inspection reports of some much older single family houses but none of them had termite issues. Also I read everywhere saying that termite is a serious red flag to purchase a house. What I am worried the most is even after paying 10k as the pest controller estimated, termites may come back soon, probably from its neighbors.

However as a novice buyer, I am now not sure if I made a right decision. Maybe I was over worried and lost a good deal. 

What would you do if the house you really liked had a termite report as in my case? 

Thanks a lot