Refund money to buyer , money on hold, item damaged

[nicsa7059]

I recently sold a item that was damaged on the way to the post office . I need to cancel and refund buyer however the buyer paid and that money is on hold. How do 

i refund the buyer when I’ve got no money cause it’s on hold.

[jellybirddesigns]

It should just reimburse from the pending funds when you cancel.

[nicsa7059]

I tried to cancel and the following happened  it's all on  hold 

Your refund did not go through. Please add a payment option to refund the buyer.Your refund did not go through. Please add a payment option to refund the buyer.

We will deduct the total amount from your funds available for payout. To make sure you can pay if they are insufficient, you must

[gutterpunkz05]

Note : you may still be liable for ebays fees