First: Are they lying that you had water damaged it or not. Because if you did why on earth would you have brought it to them. Now they have it on file that you own a water damaged iPhone XS Max. Meaning you can’t just fix it yourself since they will know you did that. Not good bud.
Second: FaceID even TouchID is very finicky and relies on a lot of handshaking with Apple to say “yup we're good (secure) and ready to work (no external interference)” Meaning it's real hard to repair properly. Without losing functionality entirely.
So no if you broke the FaceID because you stupidly put it in water then it's a lost cause. Hard lesson to learn but now you will learn it.
It’s a 1000+ device I don’t care if it’s in a double ziploc bag. It isn’t safe and isn’t waterproof.
Best treat an expensive device as so next time kid.