Though I am not a fan of Tear Downs, they are sometimes inevitable. Read my House Tear Down article carefully!
Tearing down a house is not that expensive. It depends a lot on local regulations. An excavating contractor can give you a bid...get three bids and their references.
There is a link to free, easy to use cost estimating software to determine the approximate cost to rebuild a new house.You will also find a short, fascinating "tear down" video a the end of the article.
A NOTE OF CAUTION!! Don't tear down a house that is financed and has a mortgage on it without getting written permission from the lender or paying off the loan first! It's illegal.