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What exactly is website flipping?

From what I understand, it is buying a site, w/ potential, yet poor execution, and selling it for profit.

Buying/selling websites or Making ready website then selling or buying to make profit on it :)

I've also seen it used for new domains - buying the domain putting a [niche-specific] site up and SEOing it then selling it on.

That is what "Building new site and selling it" fits :). Selling website without domain is not a good idea...