Paul is $200,000 ahead as a result of Fly-By-Night's building the house. We calculate the benefit in two steps. First, we calculate:
(non-defective house market value) - defective house market value)
This is $900,000 - $800,000 = $100,000.
Then we subtract that $100,000 from the $300,000 Paul did not pay, yielding a benefit to Paul of $200,000.