"So when an ordinary average person looks for a second hand bike, on the rare occasion they see a cheap bike, it is sold before they have a chance to buy it."
I must be an extraordinary person. I've bought all my bikes from flippers, usually for around $200-$250. Heck, I bought from the same bike flipper twice, a year apart. I got a good deal. Presumably they made enough to cost their costs. Nothing to complain about.
It takes a certain temperament to enjoy buying and selling used items, along with the chattering, haggling and dickering over prices. Some folks don't enjoy that, so they're more likely to feel ripped off. For some of us it's more about the journey and opportunity to shoot the breeze.
Sure, it's nice to snag a real bargain occasionally. But I don't feel particularly good about paying too little for something a seller didn't recognize the value of. Especially if they burned their gas money and spent time cleaning it up or making sure it's safe and ready to ride.