Either work the deal such that the owners 'fix' the problem (or put $$$ in escrow), or run. Get some estimates on what it would cost to 'clean up the situation'. You also have to wonder what other problems there might be. Have you had the home inspected by an ASHI-Approved Home Inspector? It's worth the money, especially in this case! It costs a lot more to remove asbestos than it does to have a Home Inspection. Also, do you have a Real Estate Attorney??! If not, get one. At best, he/she can advise you on some options. At worst, you may need an attorney after-the-fact if there are non-disclosed problems! It's cheaper if you have an attorney at closing than it is to retain one later. If you're gonna spend 10's of thousands of $$$ on a house, PLEASE spend a few $$$ and hire some people to look after YOUR interests. Don't trust those people looking after someone else's, or their own.
My best to ya and hope this helps.
PS: I'll be back Monday morning but others will be around ...