SEO, the real thing! Where to spend your advertising dollars

I'm going to plug a company here. Tell you that up front. And it's not my company...
I've been designing websites for 7 years, I can use PHP, HTML, Flash, CSS, and more. I'm not great, but I get the job done. My wife is a writer (morning radio). I've read tons, watch the search engines, and more. I can get a site close. I can tell you what my word concentration is, what a good KEI is, an what my site's cloud looks like. And I can make a lot more money being a broker (recruting and training) when I pay for this service.
My wife is convinced the computer is my mistress. I spend all day at the office working on the site (so I'm not recruiting), then have the laptop at home Optimizing for 3-4 hours a day. I slowly rise, and I re-write, add, etc. I enjoy this, I like this, and it is a HUGE waste of my productive time.
I've spent the last week in conversation with Marilyn Walker at the Blackwater Consulting group. She is a very smart contact at http://www.compassinternetsystems.com/ . I found them thru Point 2 agent. She looked over my site, she searched what niche I could work on with less competition, made reccomendations, sent me advise. For free. FREE!!!
Now, she has earned my respect by offering something I was having trouble finding on my own. I knew how to check various search engines for average keyword searches. I know how to check the competition for those phrases (now, she helped me on that), she checked my competition in town to see why they would rank so high, and how we could fight it.
Now the fine print: Package price, they will optimize your site for 2 phrases. The will only sell a phrase 3 times in a market (so like one broker and 2 agents maybe?). 6 month committment. If in the first 6 months, you haven't sold a home from your site, they do another 6 months for free.
They also guaranty that your site will be on the front page of at least 2 of the 7 major search engines.
Now the prices she told me (this was thru Point to Agent, but I'm not sure they don't . . bend . . that rule sometimes) was $399 for the keyword phrasing and working it thru your site, + 6 months at $240 per month (first month due with the initial $399).
I can hear the groans. $1800 for 6 months? Well, yes. But if you don't have a home sell of the web in 6 months, then it's $1800 for 12 months. And if you're optimized well in 6 months, you may be able to maintain your site for another 6 months yourselves.
Look, 1 in 4 buyers found THE home they purchased on the net. According to NAR in 2006, here's the breakdown of where buyers First found the home they purchased(in order):
36% from a Real Estate Agent, but dropping from 50% in '97 (well, MLS advertising pays off...)
24% Internet search, rising 4-8% a years since '97, but same '05-'06
15% Yard Sign
8% friend or homebuild-builder agent
5% from Newspaper
3% directly from the sellers, or knew them
1% Home book, magazine, etc.
I'm not talking about things people used to advertise, I talking about what medium that they first found the home they purchased. Now, if you consider that 80% of all buyers used the internet to search for homes, 63% used yard signs, and only 55% looked in the paper, Where should you spend your money?????