In-law unit in walkout basement

[Chris May]

I'm in contract for a house in Oakland that we think is a great candidate for house hacking. 

The house is on a slope and there is a walkout basement that extends 15 ft back into the hill/under the house. Ceiling height varies from 7.5 to 8 feet. Where the finished part ends there is a short retaining wall about 2.5 feet tall

I've gotten a few very informal estimates for extending the basement back another 5 feet and putting in a small 1 bedroom in-law unit. The estimates, one from a guy we've used before and another local contractor, are in the 200-300k range.

Those estimates sound wildly inflated to me based on quite a bit of research I've done online. Am I missing something? Is the cost of business in the Bay Area almost 3 times what it is elsewhere? There's already plumbing and sewer in the basement so I'm confused how this cost is so high.

Any thoughts on how much just the structural/foundation work should cost? How about if I paid to have everything roughed in and I finished it myself?

This is the best house hacking candidate we've found and I'd really like it to work  200k is a non-starter though.