I would do the following - message the buyer and explain about the breakage, provide pics so they know I'm being genuine. If you have any alternative items available that the buyer may still like that are of comparable value, offer a substitute. If not, or if they don't want any other items, say something like "under the circumstances, I think the best course of action will be to cancel the transaction and issue a refund, however if you would prefer an alternative option, please let me know". (You can add here another bit saying something like "if I'm not able to confirm your preference by X date, I'll go ahead and cancel the order).
Wait for their reply, and if they agree to the cancellation, cancel the order, selecting 'buyer requested to cancel', this will automatically issue a refund and (unlike some other options), won't issue a defect on your account.
