KBB is used in the US for estimating the value of a used car before buying/selling it. While helping friends buy used cars, I felt that it always overvalued the car. I feel there is an anchoring effect in play here. A car owner (seller) feels happier checking the value of their car since it is being reported higher than what they expect. This provides a nice room for providing a discount for converting the buyer. A buyer, especially a first-time one, would feel happier since they are getting a discount on the KBB value. If instead KBB rightly priced the cars, it would leave no room for negotiation, leading to lower conversions. Thus, despite having no direct incentives, KBB would be inclined towards overvaluation. I wonder if the same thing applies for home-buying sites like Zillow and Trulia.
