So for cost, the "sinking" part has to be cheaper than digging out a 400 sqft basement (that is the side of the garage) since I have 2 foundation walls, and they have easy access. They would also have to dig out the driveway, put up retaining walls, and repave the drive way. Inside, the garage/new livingroom is pretty much "finished". Would just need to move some supports (how many times has someone said that) and put in a floor. Then I would need the outside redone. Houses sell for around $300/sqft in my town, and I would be adding 400 sqft. I am thinking I can do it for less than $120K. Just talking out loud

Not a crazy idea, but you need to factor in drainage away from the house, the driveway cant be level you should have at least 1/4 inch per foot slope which should still be doable.

I'd relocate that door into the basement. It might be a bit tight with a car in there.

Unless the drawings are not to scale, or your current garage is extra deep, it doesn't look to me like you'd actually be able to park cars in the garage.

from the words at the top, the garage is currently deep. It is 13 feet

Totally worth it. Much cheaper than moving ($1M house means $70K in relator/taxes) and buying something bigger. Plus I would make money even if I just turned around and sold it. Just have to decide it the "pain and suffering" is worth it, but the way I look at it, most of it is actually "outside" (if you count the garage outside). Just have to see how long I have to vacate the house for the initial dig