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Liquidated damages in real estate are a predetermined amount of money specified in a contract that one party agrees to pay the other in the event of a breach of the contract. This clause is commonly included in real estate purchase agreements to compensate the non-breaching party for losses or damages incurred due to the breach, such as a buyer failing to complete the purchase. The liquidated damages amount is typically a percentage of the purchase price or a fixed sum and is intended to provide a fair and reasonable estimation of actual damages. This provision helps avoid lengthy and costly litigation by providing a clear, agreed-upon remedy in the event of a breach.