2 points to make in response to your question:
1) I tend to agree with Michael Ackerman on this one. We Realtors cannot tell, by your question, whether or not your property is upgraded with small rooms, or outdated with small rooms. This is crucial info that ultimately makes a difference in each Realtors' recommendation on how to move forward before selling. A good Realtor will offer you at least 2 options and share the pros and cons of each, and let you decide which way to move forward for the sale. Whether you delay a remodel and face (possibly) more inventory as competitors, or, you put the property on now and (possibly) face fewer, is hard to advise with the little information provided. Regardless, in the SF market there is always demand for "finished" AND "unfinished" (i.e., fixer) properties, which will benefit you either way if your Realtor has the correct pricing strategy.
2) It seems your primary question is about creating a "great room," or at the very least expanding the open/common space of the home to optimize a sale price. The Inner Richmond is not considered to be in an area of town where buyers tend to prefer formal dining rooms (think Lake Street, Presidio & Laurel Heights, Pac Heights and northward...), so expanding or opening up areas may ultimately lead to greater return upon sale.
I hope this information has been helpful!
Not only will you not get your money back, but you DECREASING your chances of selling at an appropriate price.
1. Getting a good quality tear down of those thick old growth redwood walls for only $20,000; or
2. Doing that without destroying the beauty of the gorgeous Edwardian home.
Try it will cost you something closer to $60 to $80 thousand at least by the time they are done..they will lead you along by the nose up to the REAL cost. Stupid. Leave it as it is. Put in some granite counter tops and get rid of the old fireplace in the kitchen instead (if there is one sealed up in there taking up space). We are in a recession and its only gonna get worse. Not a good time to invest in real estate at all.
As other agents correctly pointed out, you need someone to look at the entire house to advise you on whether this single change will make the home more desirable. If there are other issues such as outdated bathrooms, insufficient closet/storage space, or poor natural lighting, these negatives could outweigh your improvement.
Your agent will have a pulse on the market and can tell you what is in demand in your neighborhood. Today I worked an open house at a wonderfully remodeled 3BD Edwardian home our company has listed in the Inner Richmond (538 11th Avenue). This home has a traditional floorplan with a separate living room, formal dining room, and kitchen with separate breakfast area. We had over a dozen groups come through and not one person commented about the layout! Everyone loved the period detail and fine restoration of the original woodwork, hardware, and lead-glass cabinetry.
I don't work in San Francisco so I'm not really qualified to answer your question on whether you should or not knock down the walls, but what I can tell you is that if the job doesn't look professionally done or shabby it can actually hurt you rather than help you. Make sure whether you do it yourself or hire a contractor that it looks up to par with all the other remodels in your area and that in the end it integrates flawlessly with the rest of your house.
I definitely would go for it. You should get your money back.... Most people want grand open kitchen/breakfast areas/family rooms. If this is done, they will not have to factor that in to the offer price. If you have a formal dining room, I would keep that because people like formal entertaining as well.
But... $20k to knock down two walls and remodel a kitchen??? Seems like pocket change unless you're mainly just knocking walls down and not doing much in the way of remodeling. On our team we have a construction expert... he doesn't hire himself out, but is open to a consultation if you need a more specific answer.
If you look at my listing at http://www.168-170-21stAvenue.com you'll find I have an original condition property out. If you check out the almost identical property Jack Murray of Prudential Real Estate has you'll see the two walls knocked out.
We could have taken it to the next level, however at what price? Now is a great time to be selling as there is no inventory available in San Francisco. The $20k and delay might put you at a disadvantage when suddenly you're faced with twenty other 'similar' properties and must compete. You'll have a superior property no doubt, but the buyers will have more choices. So contact YOUR agent for their professional opinion.