Big problem with HUD house

[Bienes Raices]

My offer was accepted on a HUD house, and (as an investor), I made my $500 non-refundable deposit.

I've now been notified that if I want utilities on I have to pay a $130 dewinterization fee and buy a general liability policy for the period the utilities are turned back on (in case someone got shocked by electricity, house flooded, etc.). It sounds like there is no way around this.

So my choices are 1) back out and forfeit the $500 2) Go ahead and take the risk of doing inspections without elec. and water turned on (and house has been vacant for at lease a year!) 3) pay a huge amount of money to have utils turned on, etc. to do inspection, etc. and as I understand it HUD will not negotiate price on repairs, so if there is a major problem and I back out I loose over $1000.

So I'm in a bad situation. Should I cut my losses and accept that the $500 is gone, or would you take the risk of an inspection without utilities turned on?