Selling item but just noticed it's faulty

[CerealShopper]

I have messaged the winning bidder to highlight the fault and they have said that they are happy to receive the item, albeit at a reduced cost. I have made an offer that has been accepted.

My question is how to actually proceed now. Should I cancel the sale and re-list as a BIN? I'm concerned about being charged by PayPal for the original sale price, and want everything to be transparent and above board for all our sakes .

Send an invoice reflecting the reduced amount.

Ok, so need to cancel and re-list? And I do the invoice from PayPal not eBay?

Sorry for all the questions!

No, you send the invoice through eBay. It has an option to put in the amount when you click the send invoice link - or at least, it used to have that.