I am now almost convienced that my problem is not smartthings and it is android location. I got 1 false alarm yesterday and IFTTT also triggered at the same time. Also I checked my life360 history and see that couple of time over the last 3 days it reported wrong locations around 5 to 25 miles away from my home.
The below post on google forums suggest that google takes some time to fix the location on the wifi. As I just installed a new router and reset my IP address, I think I have to use it for a couple of weeks before google fixes the location properly.
https://productforums.google.com/forum/#!topic/maps/tRs9WNAWt_4
Thanks everyone, especially @WB70 for helping me find out the root cause. I will update the thread how it goes in the next couple of weeks.
Interesting article here which says changing the Wifi SSID may help. I will give this a try in the weekend.