There's an aspect to this that is frequently overlooked.

The "insider" who purchases from the developer (or another flipper) and who subsequently does a "paper flip" is often completely disengaged to the extent that there are a lot of loose ends dangling when they sell to a third party.   "Details" go missing, contracts with vendors are forgotten (think water heaters etc.) and so on.  The ultimate purchaser can be sideswiped by undisclosed arrangements made by the developer or a flipper that should have been disclosed.

 The impact on the buyer ranges from inconvenience to credit rating and other material financial impacts.   The responsibilities of flippers versus the developer in these transactions needs to be clarified.