If managed carefully, overselling hosting accounts wouldn't cause any interference to other hosting accounts on a server; but, if not properly managed and monitored, it can lead to potential disaster for the hosting clients.
By overselling resources, a web host is predicting that their clients will not use the resources alloted to them. But, if one or more clients maximize the usage of the resources the web host provides, the result could be low resource availability, causing long periods of downtime, slow site load times, and continuous server failures.
Always keep in mind that no host can provide 100% uptime, but regular downtime ranging from hours to days can affect your SEO, visitors, and business. Regardless of your SEO efforts, every time your website is unavailable could setback your SERPs.
If a site is frequently unavailable, search engine rankings can drop as indexing spiders interpret a site as no longer existing; sometimes having long term affects unless the issue is dealt with promptly by upgrading the hosting service and initiating SEO efforts to bring site traffic back to its previous status.
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