Unless you are wanting something unique, a home which already has most of what you want will probably be your best buy. If you think you will be wanting a bigger house in the future then you should consider how any house you buy now could be expanded. I recently sold a home in a nice Palo Alto neighborhood which had one bedroom significantly wider than is typical. A hallway could be put through that bedroom and a new master suite built at the end of the house. The resulting floor plan would be as good as if it were the original plan. It is an excellent home to use now and then expand when needs and finances make expansion a good option.
One of the benefits a good architect provides is making sure that his final design fits your dreams and budget. Reaching this understanding takes time and thus money. An architect can not visit an existing house and give you a great remodel design and budget in an hour or a day.
I had a home custom built for me and posted many of the steps on my website.
I am very happy with both my architect and my builder. I am very happy I built a new home. However it took a significant commitment and I would not blindly recommend that everyone who wants to, should remodel or build a new home.
The price of a stove for a kitchen can vary from perhaps $500 for a cooktop to $10,000 for a professional range (or higher). Other appliances can also easily vary by 400% in price. Some very rough numbers for additions are $10,000 for a bathroom and $30,000 for a kitchen (fairly low end) but cabinet costs, tile work, etc will vary dramatically if you match the quality these to the quality of the appliances. You have to be prepared to ask fairly specific questions to get answers which will help you decide.
I am currently working with a family who just bought a home and are trying to decide how much remodeling they want to do before moving in. Perhaps their biggest decision is whether to remodel the kitchen now or later. When they remodel the kitchen it would be most effective to move the washer and dryer. However if they move the washer and dryer, they should build a new master suite. As you can imagine the decisions are unique to each home and each buyer. General advice can only give you a pointer towards what questions to ask.
I do not mean to discourage you, but although this is a brilliant idea, unless you have a building pro in your family/friends, nobody would want to work with you on this, not at least in this area.
What you are stating above is a significant change and a large project. It will require permits and changing existing house. I'd say ~250K. I am serious. I may get bashed up for throwing this number but you will incur permit costs, increased property tax and you might need to re-landscape part of your yard. After all, you will not feel like living in a renovated house surrounded by yard full of debris and concrete.
If you keep it limited to walls, windows, floors, you have a good chance to keep expenses under 50K, assuming a 1500sqft house.Good luck with your quest.
On a more realistic note, I would not spend too much of my own time and use too much of contractor/architects/designers time before I would know that I CAN buy this particular property. Palo Alto and the surrounding areas are very competitive and multiple offers are common place. You may have to investigate a number of properties, write a number of offers before you will get into a contract. You don't want to wear off your advisers in the process.
Find a property, read the disclosures, get a short consultation with a contractor on the property, write an offer with a short property investigation contingency (something like 7 days) and get it accepted. Use the property contingency period to get more detailed contractor estimates. Your realtor should guide your through the process.
I agree that your realtor should have a network of professionals to help you assess the cost and the length of time it takes to complete the project, as well as the projected market value after the project is complete. I suggest you interview more than one contractor, because there is a wide range of costs for doing the same work. Ask to visit homes the contractors
If you don't have a Realtor representing you yet, interview a few & choose one. The "Pro's" have many contacts in the various trades. In this case if you were my client, here is what we would do to address your excellent questions and valid concerns
* Bring in an architect as a favor to hear/see what you want to do at a high level with the home. From that meeting (no cost) get a sense of the scope of the work you want to do; timeframes to accomplish, very rough estimates of costs, what to expect in regards to the permitting and inspection process with the city or county.
* Possibly bring in a couple contractors to give you estimates on the cost(s) for the major projects (kitchen, guest suite, etc...)
* As your agent do a Comparative Market Analysis (CMA) to get a sense of the value of the home after the improvements/additions are completed.
At that point we can do a cost/benefit analysis to determine if there is enough return or margin at the the price it will take or you are thinking of offering for the home. If not, present the facts to the Sellers and attempt to negotiate a lower purchase price based upon "our" realities.
There's a bit more to it than that, but that is the plan of action in essence. Do this all the time. Happy to orchestrate it on your behalf.