You can kill the current lawn and use a power rake to prep the ground for sod. There is NO need to rip up dirt, haul it off, then bring in better dirt when you could fix what you have. You need someone to give you guidance on-site. You can take my advice, bid out the job, start breaking ground, and then realize there are to many boulders and roots to rototill. I have a bad gut feeling about this job. The guy is a builder, right? Builders know how to take advantage of people in your shoes. Just be careful.
Make hay while the sun shines!