What to do with letters marked Return To Sender?

Hello 🙂 I sent out an Ebay item last week by large letter and today it came back to me marked RTS.

 

Do you think I should contact the buyer? Or wait for the buyer to contact me? If I do contact the buyer, what kind of message should I send?

 

Do I offer a refund? The entire amount or the amount minus postage? Or do I offer to resend it and ask politely if they could send a little extra for shipping? Or send it again for free?

 

Thank you!