While I'm glad this ended good for both parties, I wanted to give my opinion.
Like a couple people said, it's better to wait a little while longer before issuing a refund. You both entered into an agreement, and through no fault of either party, sometimes there are hiccups. Concerning PP, if I was the seller, I would ask you to file a claim anyways, instead of just issuing a refund. By doing that, it refunds you your money, but it also protects the seller in case the package does show up. PP can see that, and they would give back the money to the seller or request you send the item back.
Something else to keep in mind; Sometimes the items we buy are in excess of $1000+. I wouldn't be surprised, if after selling an expensive knife, sometimes the other party just doesn't have it to give back right away. This is a good example of why you should never spend the money until the buyer is satisfied, unfortunately people seem to forget this all to often.
Good points for sure. My only question/comment is with the spending of the money. It would be wise to not spend it until the package shows as arrived or the seller confirms they received it, but buyer satisfaction/buyer's remorse is generally not my concern, so long as I am honest in my listings. People have commented that I write novels in my for sake threads (here and every other forum I have sold something on). This is because I try to describe everything I can about the item, it's history, reason for selling, any issues I have had with it or know about it, etc. I generally do not offer an inspection period as such. If a buyer comes to me and says they think I misrepresented the item, I would have to see photos of what they mean because I just describe everything and anything about it. I have never personally had someone come back on me and say that something isn't exactly what I said it was. Having said that, I'm human and can make a mistake, but I would expect the buyer to bring that up right away. If they bring up something three days later, I can't say I'd be impressed. Who knows what has happened with it in three days, unless they can show me that it was just opened or something like that.
Don't mean to sound harsh, as I most definitely aim to please, but I feel that my duty is to be sure someone knows exactly what they are looking at before I send it. It is far too much hassle to deal with surprises after an item is sent. I think that is the problem sometimes for sure....People are in such a rush to sell their stuff that they over look something and then someone finds out when it arrives. Happened to me twice on this board, luckily they were honest mistakes/over lookings and the seller compensated me fairly both times.
I can make mistakes though, but I like to think that most mistakes that are easily made are small enough that most people would accept some sort of compensation or even the seller purchasing a replacement part, in the case of a pivot screw or a clip, for example.
But I do agree that the money should be available for refund until the item arrives, and at that time I'd generally ask them to open it and confirm there is no surprise, if it were of an amount that I cannot refund out of pocket. I just sold a Hinderer to a guy a little ways across the province, and that money got mostly spend immediately after sending it fully insured. Worst case, he sends it back and I pull money out of my own account to refund it, but as I say, I like to think I do a good enough job at describing and photographing items that there is no room for surprise.