They are buying the lot. That lot size in Cupertino will allow you to build a house that is 3,555 sq ft, which is bigger than most homes around it (they average about 1800 sq ft). If you build it with a basement, which a lot of new construction is doing around here, you can get up to 5,700 sq ft, since Cupertino doesn't count basement space against you for FAR regulations.

That's a pretty big lot around here, and the developer who buys it and builds the max house on it will sell that house for close to $5M.