How to report people that bid only to ask to cancel. And how do I offer it to the next bidder

[nobody*s_perfect]

Cancel the transaction, citing "Buyer request" as the reason.

Here's the Help page about sending second chance offers.

https://www.ebay.com/help/selling/listings/selling-auctions/making-second-chance-offers?id=4142

[donsdetour]

Do not bother to report them as they get a strike when you cancel the item as buyer requested.

As for the second chance, follow advice already given.