Termite Inspection at House about to buy?

We made an offer on a house in Ontario California and the seller came back with a termite report saying that it must be acknowledge by the buyer. The report says that there is drywood termite and dryrot damage at garage and patios, but there is nothing mentioned for the inside of the house. This is a REO/ Bank... show more We made an offer on a house in Ontario California and the seller came back with a termite report saying that it must be acknowledge by the buyer. The report says that there is drywood termite and dryrot damage at garage and patios, but there is nothing mentioned for the inside of the house. This is a REO/ Bank owned house.

Should I back-out of my offer or is this type of termite damage common?

By acknowledging the report am I agreeing to pay the $2300 for the repairs?
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