I'm guessing that "sewer lateral" is what you are calling the sanitary main going out to the street? Keep in mind the garage drain is stormwater, and cannot be tied into the sanitary waste system.

Whether you are on a slab or crawl space makes a big difference. That era of house probably has cast iron and maybe some galvanized piping added over the years. Cast iron may be pitted/rusting at this stage. The main to street is expensive; that can be done anytime in the future. The house sanitary can be converted to PVC since you are adding a bathroom and probably moving another. It wouldn't take much to tie in the sink and laundry, and it can just be the portion say, within the crawl space if you have one.

But it sounds like a gut remodel, so the plumbing should go along with that.

Do you have a GC for this project? That person should be able to answer these questions. FWIW I live in Oakland and did a major renovation on my 1914 home a few years ago. A sewer inspection was required by the city as part of the permit process, and the sewer lateral needed to be replaced. My contractor dealt with all the subs and permits.

Older house often have a combined sewer, where storm water and sanitary are intermixed and only one line goes to the street. Youll have to split the systems if you get a permit. Are there storm sewers in your area? I would certainly look into doing the below grade sewer work, if possible, and whatever work is accessible when doing electrical. See if you can get a good plumber to survey the situation.

There are several issues here:

1. This may be a combined sewer (sanitary and stormwater) or it may be separate.

The drain outside your garage is obviously stormwater and the inlet is too small. I don't know if the problem is the lateral is too small, but obviously the inlet is.

2. Any buried drain lines that are original to the house (I don't know about that one in front of your garage is original) are likely going to be clay tile once they go outside the foundation wall.

3. Clay tile drain lines are prone to root intrusion, breaking and shifting. At this point they are nearing the 100 year mark - and may be viable for a while longer - but it's not uncommon to have to dig them up and replace them because they broke, collapsed, shifted, etc.

4. The main stack inside the house is likely cast iron and will last unless you see obvious corrosion.

5. The remaining original drain lines (1.5"-2") are likely galvanized. Galvanized drain lines should be replaced whenever you get a chance. They corrode and cake up inside. Put in PVC drain lines to the cast iron stack whenever you do renovations. You can keep a galvanized vent line - they will generally be fine, but the drain lines will not be. Below is a galvanized bathroom sink drain I cut out of my bathroom (1943 construction). Note how the inside is completely closed off.

6. The original supply lines are likely galvanized. They usually have been pretty well messed with over the 100 years - so copper, PVC, etc. spliced in. They usually are pretty plugged up also. Again if you are opening a wall, replace the galvanized pipes with PEX or possibly copper... but probably PEX due to the cost of copper. I typically just start over completely with the supply lines, and you probably will also. Note, you can't mix copper and galvanized without a transition.

So, what "value" do you get from this?

When I buy an older home, I do look at the mechanical systems. If they have been updated, that's a big positive for me. I do not want to buy a nicely finished home knowing that I'm going to have to open the walls and redo the kitchen and bathroom, especially, because they didn't do the mechanicals.

What's more, if you intend to keep the home, it means that you have fewer worries about having to dig things up, or open walls, or have drains not work, etc.

Does that translate to a dollar value? Probably not.

Also, plumbers doing a significant rehab are simply not going to work with galvanized pipes at all. If I have a small repair or modification I'm not going to switch the pipe material, but if it's any significant amount of work, it's going in with new materials.

I have read in , SF, sanitary and storm share the same plumbing. Heavy rains cause sewage overflows and violations.