My understanding of flipping was what I thought to be a common-sense one. However, upon researching it further I stand corrected: https://en.wikipedia.org/wiki/Flipping#Wholesaling_and_assig...

One part of that article that stands out is that this is possible because the seller is generally not getting market value, which implies that the seller's agent isn't doing a great job of representing them:

  "This practice is often frowned upon in the real estate
   community since it seems unethical or illegal. In practice
   there is nothing illegal about wholesaling or assigning
   rights to a purchase contract even if it is multiple times.
   It is important to understand that the reason there is an
   opportunity to wholesale is because the original seller is
   selling the property for substantially less than market
   value."