Paypal dispute and when to issue refund

[puffinpenguin]

I know this might be silly, but I am new to ebay disputes.

Does somebody know how the process works when the buyer has opened a dispute.

I have the options to

• Accept the refund & close the dispute      or
• Don't accept – show other options

If I select 'issue refund' does the money get refunded straight away? 

 If I select 'Don't accept -show other options' I get the next screen which has options:

• Offer a refund for a different amount.
• Decline this refund request but continue communicating with (buyer name).

• Escalate this dispute to a PayPal claim.

What I would like to do is give refund, but not until the item has been returned. Then after inspecting item, I will issue another refund for return postage if I am at fault. How do I do this?

Thank you for your help