Correct spelling, explanation: overrated is an adjective that appeared around the 17th century. It consists of three important parts: the prefix over-, the verb rate, and the suffix -ed. Over- is a word-forming element meaning variously above, highest, across. The word overrated should contain the whole version of it, not the version without -r letter. You can’t spell it as overated.

Definition of overrated:
adjective, considered to be better than it really is
I think that modesty is a very overrated quality.
Good table manners are largely overrated.

Collocations with overrated:
Some most commonly used collocations include: overrated by fans, overrated and overpriced.
I believe some movies are really overrated by fans.
This guidebook is overrated and overpriced.

Incorrect spelling, explanation: you can’t spell this word as overated because the correct version of it – overrated – is a combination of three elements: the prefix over, the verb rate, and the suffix -ed. You can’t omit any of it. It’s really important to remember that the two -r letters should be next to each other. Overrated is the only correct version of this adjective.