Earlier quoted context omitted.
He thought a camera would be good enough, but the thief was smart enough to cover his face. He over estimated how dumb the crook was, for the solution (camera), required a thief to walk around showing his face. See? He overestimated how dumb crooks are, and was robbed.
Thanks! I think reread this subthread about five times before it clicked that "overestimate" was truly the word OP intended to use and there was a valid point being made via that word. Totally changes the meaning of the comment if one assumes that it was a typo and OP intended to use "underestimate".
"Don't overestimate how dumb they are" is logical and correct. However, because "how dumb they are" is in the sentence, it emphasizes, well, that they are dumb, which is not what the OP intended to say.
Writing it as "don't underestimate how smart they are" is more readable, although logically, it's stating the same thing.
Even better, I would have written it as "don't underestimate how smart they can be."