Correct spelling, explanation: overrated is an adjective that comes from the verb overrate. It consists of three elements: the prefix over-, the verb rate, and the suffix -ed. None of these parts should be omitted when spelling. That’s the reason why overated is just a mistake. You can’t forget about two -r letters – one of them is contained in the word over, the other is rated.

Definition of overrated:
adjective, rated or valued too highly
My best friend used to say that love was overrated.
In my opinion, Shakira is a hugely overrated singer.

Collocations with overrated:
Some most commonly used collocations include: overrated movie, overrated player.
Avatar is a totally overrated movie, don’t you think?
Mario Balotelli is one of the most overrated players ever.

Incorrect spelling, explanation: overated is a misspelled version of the adjective overrated, which consists of two parts: the prefix over- and past simple/past participle form of the verb rate. It is also worth mentioning that the word overrated comes from the verb overrate, which contains the double -r. consonant. Some English users tend to skip one of them. You have to be careful not to make this mistake.