How to justify the price on this deal?

[Michael Stole]

The house is for sale at $790k. The lot is 50*90.

There is a lot (just a lot) cross the street, 70*95, for sale at $750k. Assume that this lot sells at its list price, $750k, and assume that the per sqft price of land is the same for the two lots, then the lot of the first house worths $750k*(50*90)/(70*95)=$458k. This further suggests that the seller of the first house is selling the house itself for 790-458=$332k.

But this is a 2000 sqft house built in 40's probably, and comparable analysis shows that this is a fair price.

Then how can I justify the price on the first house? Am I making any mistake in the calculation?