You should contact three local contractors for estimates in answer to you question. Do so, will enable them to see your home first-hand, and allow you to explain the scope of the work as you envision it.
It would be best to check with the city planning and permit department. You definitely need permits for any construction and remodeling, so it wouldn't surprise me for there to be a permit requirement for demolition as well.... more
Ultimately Patrick is correct. I would suggest before you make any changes to ask a Realtor to take a look at your home. Again, Location will make a tremendous difference, ie: if you are around the University the market could be to some of our out of town Alums that want a place to stay on game days.... more